Tag: Motley Fool

ASX dividend shares have the ability to deliver a combination of both investment income and potential capital growth over time.

However, a business isn’t a better pick just because it pays a dividend. But I think it’s worth paying attention to businesses that are capable of growing earnings while paying dividends.

We don’t have a crystal ball to know what’s going to happen next. But we can analyse company plans as well as longer-term trends or projections.

Amid the current market volatility, I think the below two ASX dividend shares can pay attractive income while investors ride through the ups and downs of this era of inflation and rising interest rates.

Metcash Limited (ASX: MTS)

Metcash has three pillars to its business – food, liquor, and hardware. It’s a supplier to a number of well-known businesses including IGA, Foodland, Cellarbrations, The Bottle-O, IGA Liquor, Duncans, Thirsty Camel, Big Bargain, and Porters. In hardware, Metcash has the brands Mitre 10, Home Timber & Hardware, and Total Tools.

In FY22, Metcash decided to pay a total annual dividend of 21.5 cents per share, which was an increase of 22.9% compared to FY21.

The ASX dividend share targets a dividend payout ratio of around 70% of underlying net profit after tax (NPAT). This reflected higher underlying earnings – in FY22, Metcash’s underlying NPAT grew 18.6% to $299.6 million.

Metcash is doing a number of things to try to grow profit. These include refreshing stores, improving its logistics, planning a new distribution centre, growing its store networks, and selling more goods online. In the first seven weeks of FY23, Metcash reported “strong sales momentum” with group sales growth of 8.6%.

According to CMC Markets data, Metcash is expected to pay a grossed-up dividend yield of 7.4% in FY23.

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is another ASX dividend share that I think is worth looking at.

The company has a national store network that sells a wide variety of products for infants and toddlers such as prams, furniture, clothes, and toys.

This ASX dividend share has grown its dividend for shareholders each year since 2019, which includes through the COVID-19 years.

In the company’s latest result, the FY22 half-year report, it showed 15.4% growth in earnings per share (EPS), allowing the dividend to be grown by 13.8% to 6.6 cents per share. This growth partly occurred due to 10% total sales growth. This included 6.8% comparable store sales growth and 32.6% online sales growth. Online made up 23.8% of total sales.

Baby Bunting is also doing a number of things that can help its profit grow in the coming years. Namely, it wants to grow its Australian store network to at least 100 stores as well as open at least 10 stores in New Zealand. It also plans to grow online sales, increase its private label and exclusive product sales (which come with a higher gross profit margin), improve its supply chain, expand its product offering, and find efficiencies around the business.

Baby Bunting notes that its products are less discretionary and more essential in nature.

As at 9 February 2022, the company reported that comparable store sales had grown by 3.6% in the previous six weeks, with online sales growth of 30%.

In FY23, CMC Markets has an estimate of an annual dividend of 18 cents per share, which translates as a forward grossed-up dividend yield of 5.5%.

The post What I love about these 2 ASX dividend shares appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• Top brokers name 3 ASX shares to buy today
• Why Allkem, Kogan, Metcash, and Sezzle shares are sinking
• Why is the Metcash share price in reverse today?
• 2 excellent ASX dividend shares rated as buys by experts

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Baby Bunting. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Shares of Beach Energy Ltd (ASX: BPT) have rallied in a sawtooth-like fashion since December 2021.

This year to date, the ASX energy player is up 32%, outpacing pretty much all other pockets of the market during that time.

What does FY23 hold for Beach Energy shares?

Energy markets have cooled in recent months. Brent Crude now trades back in line with April lows at US$100/barrel, signalling a wind back in the oil and gas trade.

Meanwhile, natural gas markets continue to run hot, with European gas contracts in particular locking in triple-digit gains.

As such, energy shares such as Beach continue to book substantial gains into the new financial year.

The question now turns to where Brent Crude and natural gas markets might head next, considering the short-term pullback.

Earlier in July, broker UBS revised its forecasts for oil and gas. It projects crude prices will retain support from investors amid a disrupted global oil supply.

It also projects an average 40% increase in LNG prices to North Asia by 2026, propelled by declining gas exports from Russia to Europe.

UBS says that this more dynamic pricing environment is set to provide a significant cash injection to Australian exploration and production companies.

As such, it raised its price target on Beach to $2.05 per share on a buy rating, signalling a 23% return potential should the broker prove correct.

Oil and gas markets

The debate on oil and gas markets is contentious and has players on both sides of the argument.

“Demand concerns continue to spook the oil market,” Refinifiv Oil Research wrote last week. It added:

The OPEC also came out with an outlook for global oil demand and economic growth, pegging the oil demand growth for 2023 at 2.7 million bpd, which is lower than the estimate of 3.36 million bpd for 2022, but still an optimistic forecast.

Despite the debate on forecasts and such, broker sentiment is still positive on the share.

Beach Energy is rated a buy from 11 of the 15 brokers covering its shares, according to Refinitiv Eikon data.

The consensus price target from this list is $1.97 per share, in line with August 2021 analyst projections, per Refinitiv.

Beach Energy shares are up 29% in the past 12 months.

The post What’s the outlook for Beach Energy shares in FY23? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• These were the 5 top performing ASX energy shares of FY22
• Why are Beach, Santos and Woodside share prices tumbling today?
• ASX 200 midday update: ANZ confirms MYOB talks, energy shares fall
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Nuix Ltd (ASX: NXL) share price is having a very poor start to the week.

In early trade, the investigative analytics and intelligence software provider’s shares crashed 25% to a new record low of 55 cents.

The Nuix share price has recovered a touch since then but remains down by 11% at 65 cents.

Why is the Nuix share price crashing?

Investors have been selling down the Nuix share price on Monday after the company released an update on its performance in FY 2022.

According to the release, Nuix expects to report annualised contract value (ACV) in the range of $160 million to $163 million.

This will be down from $165.6 million a year earlier. It is also lower than the ACV of $164.5 million reported during the first half of FY 2022.

Also falling year on year will be the company’s revenue and statutory EBITDA. These are expected to be in the ranges of $151 million to $154 million and $10 million to $12 million, respectively.

The midpoint of these guidance ranges implies declines of 13.4% and 64%, respectively, year on year.

What’s happening?

Management blamed its weaker top line performance on the recognition of revenue for some large multi-year contracts in the prior period, lower sales to new customers, and slipped deals into the FY 2023 financial year.

As for its operating earnings, these are being impacted by materially higher non-operational legal costs during the financial year of approximately $14 million. It is also continuing to reinvest in sustainable revenue generation, with further investment in sales and distribution capability, marketing, and product development.

Excluding the impact of non-operational legal costs and trading losses associated with Nuix’s recent acquisition of Topos, underlying EBITDA is expected to be in the range of $25 million to $27 million. This compares to pro forma EBITDA of $66.7 million a year earlier.

Nuix ended the financial year with cash on hand of $46.8 million.

The post Why is the Nuix share price crashing 25% to a record low today? appeared first on The Motley Fool Australia.

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More reading

• EML Payments share price lifts on confirmed takeover talks
• Why I think these 2 ASX shares are steals
• Down 12% in a month, is the Fortescue share price a buy?
• ‘High quality’: Why Wesfarmers shares are a buy in this broker’s books
• I think the Betashares Nasdaq 100 ETF looks like a strong buy

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The EML Payments Ltd (ASX: EML) share price is higher on Monday after the company confirmed it recently received takeover interest from multiple parties.

And while takeover talks have since come to an end, the news has seemingly excited the market.

At the time of writing, the EML share price is $1.025, 0.49% higher than it was at the end of Friday’s session.

Though that’s notably lower than its intraday high. The stock peaked at $1.135 this morning, representing an 11% gain.

Let’s take a closer look at what’s going on with the S&P/ASX 200 Index (ASX: XJO) tech share today.

EML share price rises on previous takeover interest

The EML share price is in the green after the company responded to media reports, admitting two parties had shown acquisition interest last month.

The company said it had shareholders’ best interests front of mind when considering the proposals. However, takeover talks with both parties have since ended.

It comes just months after similar media reports led EML to admit it had been in takeover discussions with Bain Capital.

It’s also only a week since the company’s former CEO walked away from the top job. Emma Shand has stepped up to the helm following Tom Cregan’s shock departure.

It seems reporting by the Australian Financial Review (AFR) was the catalyst for today’s announcement.

On top of reporting on takeover interest, the publication also noted apparent “friction” within the company’s leadership. Some insiders reportedly feel the EML board has been reluctant to engage with talks that could see it removed from the ASX.

In today’s release, the company said:

The board of EML is excited about the appointment of Emma Shand as the company’s new group CEO and for the future prospects of EML under Emma’s leadership.

The EML share price has tumbled around 70% since the start of 2022. For comparison, the S&P/ASX 200 Information Technology Index (ASX: XIJ) has fallen 33%.

The post EML Payments share price lifts on confirmed takeover talks appeared first on The Motley Fool Australia.

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More reading

• EML Payments share price rebounds 12% after former CEO sheds more light
• What’s the outlook for ASX BNPL shares in FY23?
• FY22 was a lousy period for ASX fintech shares. Here’s why
• Is FY23 going to be a winning year for ASX fintech shares?
• These were the best (and worst) performing ASX 200 sectors of FY22

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended EML Payments. The Motley Fool Australia has positions in and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX share market volatility may seem scary in the moment, but I think that it’s offering investors the ability to invest in some very compelling ideas.

Not every business is worth owning just because it has fallen in value. But I’ve got my eyes on some leading ideas that now seem really good value amid the sell-off that we’ve seen.

I think that ASX shares that are growing well could be really attractive ideas to consider, particularly if they’ve been sold down. In my opinion, the below two contenders could do well over the coming years:

VanEck Video Gaming and Esports ETF (ASX: ESPO)

This exchange traded fund (ETF) looks to give investors exposure to the global video gaming and e-sports sector.

Looking at the holdings, there are a total of 25 businesses in the portfolio. The top ten holdings make up more than 60% of the total allocation. Readers may have heard of some of these names: Tencent, Activision Blizzard, Nvidia, Nintendo, Advanced Micro Devices, Netease, Roblox, Electronics Arts, Bandai Namco, and Aristocrat Leisure Limited (ASX: ALL).

VanEck said that this ETF can benefit from “the increasing popularity of video games and e-sports”. It’s invested in businesses that make a significant portion of their revenue from the video gaming industry.

E-sports revenue is certainly growing quickly. VanEck said it has grown by an average of 28% per annum since 2015.

It notes that e-sports has created new potential revenue streams from game publisher fees, media rights, merchandise, ticket sales, and advertising.

City Chic Collective Ltd (ASX: CCX)

City Chic is one of the leading ASX retail shares in my opinion. It sells plus-size women’s apparel, footwear, and accessories. City Chic owns a number of brands including City Chic, Avenue, Evans, CCX, Hips & Curves, and Fox & Royal.

One of the things that attracts me to this business is the fact that it’s going global. It has a presence in the UK, US, and Europe, with the intention of growing in each region and launching more ranges. Canada is another place where it could also grow over time.

Increasing scale can help a number of areas of the business, leading to operating leverage.

The ASX share has outlined several positives for its business in the coming years.

City Chic said that the plus-size market is expected to grow by around 7% per year. The company noted that the average annual spend on plus-size apparel is currently materially less than the rest of the women’s market. But City Chic also said that there are “increasing rates of plus-size women globally”.

In late April 2022, the company said that it had delivered strong sales growth in the FY22 second half to date, underpinned by the company’s in-stock inventory position. Trading margins have remained consistent with last year. The northern hemisphere has grown to be around 55% of group sales and continued its growth at a rate of 52% in the second half of FY22.

City Chic continues to add new partners. It’s thinking about increasing prices and it expects to make more earnings before interest, tax, depreciation and amortisation (EBITDA) in the second half of FY22 compared to the first half. I think the company can provide solid compound growth in the coming years as it wins over more customers in more countries.

Since the start of 2022, the City Chic share price has fallen around 60%. This is much more attractive to me.

The post Why I think these 2 ASX shares are steals appeared first on The Motley Fool Australia.

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More reading

• Here are 3 ETFs for ASX investors to buy in FY23
• Embattled ASX 200 retail shares primed for a comeback: experts
• 3 excellent ETFs for ASX investors to buy in July
• 2 quality ETFs to buy for the long-term
• What impacted ASX 200 retail shares this week?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Activision Blizzard, Advanced Micro Devices, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Electronic Arts. The Motley Fool Australia has recommended Activision Blizzard, Nvidia, and VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Shares in Fortescue Metals Group Limited (ASX: FMG) have tumbled in the past month. In fact, just a few days ago on Friday, the Fortescue share price hit an 8-month low.

The world’s fourth largest iron ore miner’s shares have come under significant selling pressure amid lower iron ore prices.

At the time of writing, the Fortescue share price is up 1.35% at $16.55.

This means the company’s shares are now down 11.02% since this time last month.

Fortescue faces tough trading conditions

The severe drop-off in iron ore prices is negatively impacting Fortescue shares as well as the broader S&P/ASX 200 Resources (ASX: XJR) index. As of Friday, the latter was also down by around 12% over the past month.

On 17 June, the steel-making ingredient was fetching US$135.69 per tonne.

However, a downbeat outlook on Chinese demand led the iron ore price to sink to year-to-date lows of under US$100 on Friday.

This represents a fall of more than 20% in just one month and over 50% in the past year.

Furthermore, as reported by my Fool colleague late last week, a cautious outlook on the mining sector by UBS could be further weighing on Fortescue shares.

The broker has a neutral rating with a price target of $16 a pop. This appears to be in line with what investors currently deem to be fair value for Fortescue shares.

UBS noted that higher all-in sustaining costs (AISCs) across the board would likely hit mining profits. Subsequently, this could lead to a number of miners missing their production guidance targets.

Where iron ore prices, and subsequently the Fortescue share price, go from here largely depend on what happens to China’s economy.

Ongoing COVID-19 outbreaks, as well as a cutback on steel production, are having a negative effect on the iron ore industry. The Chinese government is trying to negate these effects with stimulus packages but appears not to have had much of an impact so far.

On top of that, a potential global recession is also overshadowing the market.

Fortescue share price summary

Wild price swings have been the norm for the Fortescue share price in 2022 – down 14%.

After touching a record high of $26.58 on 29 July last year, its shares dropped to a 52-week low of $13.90 in October.

Fortescue has a market capitalisation of around $50.96 billion.

The post Down 12% in a month, is the Fortescue share price a buy? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• Here’s why the Fortescue share price is falling 6% into the dirt today
• These ASX 200 mining shares are getting buried. What’s happening?
• ASX 200 midday update: Rio Tinto’s update, BHP and Fortescue sink, AVZ remains suspended
• These ASX 200 mining shares are bolstering the market today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Wesfarmers Ltd (ASX: WES) share price has dropped by around a quarter since the start of 2022.

It has been a rough time for many ASX retail shares and growth shares since the start of the year, amid inflation and rising interest rates.

Wesfarmers is one of the oldest businesses in Australia. It operates several businesses, including Officeworks, Target, Catch, Kmart, Bunnings, Priceline, Soul Pattinson Chemists, Clear Skincare Clinics and some industrial businesses.

Which broker likes Wesfarmers?

Broker Morgans thinks Wesfarmers is a leading business in the retail space and worth owning, which is why it has an ‘add’ rating on the business with a price target of $58.40. That implies a possible upside of more than 25%.

In other words, Morgans thinks Wesfarmers shares can regain most of its lost ground over the next 12 months.

As mentioned by my colleague James Mickleboro, Morgans said that Wesfarmers had one of the highest-quality retail portfolios in Australia, with a good management team and key business, Bunnings, continuing to perform well. Therefore, the fall in the Wesfarmers share price could be an opportune time to buy shares.

Dividend and valuation

Wesfarmers has committed to producing shareholder returns. Part of that is by paying an attractive dividend to investors.

Morgans expects the company to pay an annual dividend per share of $1.65 in FY22. That translates into a grossed-up dividend yield of 5.1%.

Morgans has also pencilled in dividend growth of around 10% in FY23 to an annual dividend per share of $1.81. This puts the forward grossed-up dividend yield at 5.6%.

In line with a ‘buy’ rating, Morgans expects Wesfarmers will generate more net profit after tax (NPAT) than other brokers.

The broker’s earnings estimates put the Wesfarmers share price at 23x FY22’s estimated earnings and 21x FY23’s estimated earnings.

Why are investors turning negative on the Wesfarmers share price?

As one of the largest retailers in Australia, Wesfarmers is heavily exposed to the Aussie consumer. Rising interest rates and higher inflation could hurt household budgets and limit their spending at Bunnings, Catch and its other retail brands.

That’s partly why brokers like Macquarie, Ord Minnett and Citi all have negative ratings and price targets at least 5% lower than where the business is currently performing.

Snapshot

Despite the fall since the start of the year, the Wesfarmers share price has lifted by around 10% over the past month.

The post ‘High quality’: Why Wesfarmers shares are a buy in this broker’s books appeared first on The Motley Fool Australia.

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More reading

• Top ASX dividend shares to buy in July 2022
• Why analysts say these excellent ASX dividend shares are buys
• How much have Wesfarmers shares paid in dividends over the last 5 years?
• Broker names 2 more blue chip ASX 200 shares to buy in July
• What’s the outlook for the Wesfarmers share price over the rest of 2022?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This could prove to be a good time to invest in the Betashares Nasdaq 100 ETF (ASX: NDQ).

It has been a rough period since the start of 2022. The NDQ exchange traded fund (ETF) has dropped by around 25% in that time.

But, an ETF’s performance simply reflects the movements of its underlying holdings.

The Betashares Nasdaq 100 ETF tracks the performance of the NASDAQ 100 Index, which is made up of 100 of the largest non-financial businesses listed on the NASDAQ.

The provider of the ETF, BetaShares, notes that many of the companies in this portfolio are at the forefront of the ‘new economy’.

What are some of the names in the portfolio?

At 15 July 2022, these were the biggest positions: Apple, Microsoft, Alphabet, Amazon.com, Tesla, Meta Platforms, Nvidia, PepsiCo, and Costco.

As readers may recognise, these are some of the leading businesses in the world at what they do. It can be hard to dislodge a business when it has such a strong competitive position.

Think how many tens of billions of dollars a business might need to spend just to have a chance of competing with Apple’s iPhone or Alphabet’s Google.

For me, it’s the quality nature of the underlying businesses that makes the Betashares Nasdaq 100 ETF so attractive to me. Just look at the returns of the NDQ ETF over the five years to 30 June 2022. It achieved an average return per annum of 18.2% despite the recent decline.

Valuation change

The collective group of businesses in the NASDAQ 100 has dropped by around 25% in valuation amid worries about inflation and interest rate changes.

As an investor, I want to invest in good businesses at good prices. Being able to buy all these great businesses at a price that’s 25% cheaper than 2021 looks good to me.

According to BetaShares, at 30 June 2022, the forward price/earnings (p/e) ratio was just under 20 at 30 June 2022. While this isn’t exactly low, I think it’s a worthwhile price to pay considering the long-term growth potential for plenty of the underlying businesses.

Useful diversification for a reasonable price

There are more than just the major holdings in the portfolio. Names like Adobe, PayPal, Cisco Systems, Qualcomm, Intuitive Surgical, Booking, and ASML each have a compelling case to make.

The NDQ ETF can provide diversification for investors who are largely invested in ASX shares, with the S&P/ASX 200 Index (ASX: XJO) being dominated by financial shares and resource shares. The NASDAQ 100 is largely about tech shares, with a 50% weighting to IT.

It’s worth bearing in mind that some of the names that readers may think are ‘technology’ are actually classified as something else. For example, Tesla and Amazon are counted as consumer discretionary businesses, while Alphabet and Meta Platforms are classified as communication services.

The annual management fee is 0.48%.

The post I think the Betashares Nasdaq 100 ETF looks like a strong buy appeared first on The Motley Fool Australia.

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More reading

• What’s in store for the BetaShares NASDAQ 100 ETF in the next 12 months?
• 2 beaten down ETFs for ASX investors to buy
• Here are 3 fantastic ETFs for ASX investors to buy now
• Why the BetaShares Nasdaq 100 ETF may have done better in FY22 than you thought
• Here’s how June treated the NDQ ETF

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BETANASDAQ ETF UNITS, Booking Holdings, Cisco Systems, Costco Wholesale, Intuit, Microsoft, Nvidia, PayPal Holdings, Qualcomm, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $420 calls on Adobe Inc., long March 2023 $120 calls on Apple, short January 2024 $430 calls on Adobe Inc., and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Adobe Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Booking Holdings, Nvidia, and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I am always on the lookout for opportunities that look like strong long-term ideas. At the current time, I think the Corporate Travel Management Ltd (ASX: CTD) share price looks like a compelling idea in the ASX travel share space.

As the name may suggest, it’s a leading business in corporate travel. There are a few factors the company says put it ahead of many other competitors. These include its value proposition, its global scale, and its financial strength. Corporate Travel believes all are highly relevant during the COVID-19 recovery period.

But there’s more to why I think the business is looking like a good value opportunity than just what it does.

Better valuation

It sounds pretty simple, but I prefer being able to buy a business at a lower price than a higher price.

How much cheaper is the business? It depends on when you look at the price changes but since 29 April 2022, the Corporate Travel Management share price has dropped around 30%.

While it’s not quite as simple as saying the business is now 30% better value, I think the company is a lot more appealing considering travel is returning in volume.

Looking at the earnings estimate on CMC Markets, the ASX travel share is projected to generate earnings per share (EPS) of 79 cents in FY23. That puts it at 23 times FY23’s estimated earnings.

Strong market share gains

The company claims that it is recovering well ahead of consensus and is ahead of its peers. To me, this is a sign of the quality of the company and how strong it is in the market, which is probably a good omen for the future.

Management thinks that the company will reach 100% recovery faster than the wider corporate travel industry.

The company says that it has made “strong market share gains” thanks to its value proposition of service, technology, and the fact that a return on investment (ROI) is highly relevant. Corporate Travel Management also noted that there are little to no recovery impediments existing in North America, the European Union, and Australia and New Zealand.

Profitable recovery

The company has made “transformational” acquisitions during the COVID-19 period which can help it generate much more profit.

Corporate Travel Management said it’s targeting earnings before interest, tax, depreciation and amortisation (EBITDA) of $265 million at full recovery. This would be 76% more than it was before COVID-19 hit. The company’s FY22 fourth-quarter revenue was expected to exceed what was generated in 2019.

The company has been making underlying EBITDA profit since March 2021. But, it was expecting the FY22 fourth quarter would provide strong momentum going into the 2023 financial year.

Foolish takeaway

When you put all those factors together, I think the Corporate Travel Management share price looks much more attractive as it works towards a full recovery of volume and much greater profitability.

The post Why I think the Corporate Travel Management share price is too cheap to miss appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Corporate Travel Management Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Woolworths Group Ltd (ASX: WOW) share price is falling on Monday morning.

At the time of writing, the retail giant’s shares are down 0.5% to $37.35.

What’s going on with the Woolworths share price?

The Woolworths share price has dropped into the red today despite the announcement of an acquisition.

According to the release, the company’s retail media business, Cartology, has signed an agreement to acquire 100% of Shopper Media Group for a cash consideration of $150 million.

Shopper Media Group is a leading Australian digital out of home media company, offering targeted shopper advertising through a national screen network of more than 2,000 screens in over 400 shopping centres.

The transaction is subject to ACCC approval and the satisfaction of customary closing conditions. If all goes to plan, completion is expected to occur by the end of calendar year 2022.

Management commentary

Woolworths’ CEO, Brad Banducci, spoke positively about the acquisition and the retail media business. He said:

Retail media is developing rapidly and is an important part of the evolution of Woolworths Group. We’re excited about the opportunity to bring together the complementary capabilities of our retail media business, Cartology, with Shopper’s expertise in out of home media.

This sentiment was echoed by Cartology’s managing director, Mike Tyquin, who believes that this is an important acquisition. He added:

Shopper’s screen network offers advertisers outstanding retail context and proximity. Shopper has invested heavily in technology, helping the business pave the way for innovation in retail out of home media.

The acquisition of the business is an important next step in further unlocking the growth potential of Cartology and accelerating our goal to become the trusted media partner of choice for brands and retailers. It will allow us to provide our clients more opportunities to reach their customers via seamless and targeted advertising solutions.

The post Woolworths share price falls despite ‘important’ $150m acquisition appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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