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The Link Administration Holdings Ltd (ASX: LNK) share price is up 6.6% in morning trade to $4.08.

The big lift in the administration services company’s shares comes after it received an improved takeover offer from Dye & Durham Corporation.

What is the new takeover offer?

It’s been a bit of a seesaw when it comes to the value that Dye & Durham places on the Link share price. Dye & Durham’s proposed acquisition of Link by way of a scheme of arrangement was first reported to the market on 22 December.

At the time the takeover offer was for $5.50 per share. But last week Monday 27 July, that figure was slashed by 22% to $4.30 per share.

The reduced Link share price offer came after the ACCC expressed concerns over the deal, apparently due to Link’s ownership in PEXA Group Ltd (ASX: PXA). Dye & Durham told Link management it may need to provide an undertaking to the ACCC to obtain approval for its acquisition.

Atop that undertaking, Dye & Durham also cited “the current state of the financial markets” for its reduced offer.

This Monday 4 July, the Link board reported it could not recommend the takeover for $4.30 per share while stating they’re continuing to negotiate the deal. The Link share price sank on the news.

But those negotiations look to have made some progress, as this morning Link reported Dye & Durham had increased its reduced offer by 6% to $4.57 per share.

The board said it will consider the revised offer. Link has opted to postpone the shareholders’ meeting scheduled for next Wednesday 13 July for a date yet to be determined.

Link share price snapshot

Despite the nice lift today, the Link share price remains down 27% in 2022. That compares to a year-to-date loss of 13% posted by the S&P/ASX 200 Index (ASX: XJO).

Link has a market cap of $2 billion.

The post Link share price jumps 7% on beefed up takeover bid appeared first on The Motley Fool Australia.

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More reading

• Why Audio Pixels, Lake Resources, Link, and Magellan shares are dropping
• Link share price drops on takeover rejection
• Why Imugene, Link, Metcash, and Sayona shares are racing higher
• Link share price pushes higher despite revised takeover offer
• Down 20% this week, why is the Link share price outperforming today?

Motley Fool contributor Bernd Struben 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 Link Administration Holdings Ltd and PEXA Group Limited. 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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ASX healthcare shares were a mixed basket this past financial year.

After a healthy first half of FY22, the sector took a massive plunge from the restart of trade in January.

The S&P/ASX 200 Health Care Index (ASX: XHJ) fell around 5% into the red for the 12 months to June 30. It traded in sideways territory from January to June.

These three healthcare shares are worthy of note. Let’s take a look at each one.

CSL Limited (ASX: CSL)

The biotech giant is a natural on this list. It suffered a similar fate to the wider sector on the charts in FY22.

After soaring to a 52-week high price of $318 on 24 November, ASX investors sold CSL down to a 52-week low of $243 per share by February.

CSL announced its acquisition offer for Vifor Pharma in December last year. It issued US$4 billion of bonds in the US debt capital markets to finance the transaction.

The six issued notes pay a coupon ranging from 3.85% to 4.95% per annum and range from five years to 40 years in tenor.

The CSL share price finished FY22 in a bullish uptrend that has continued into the new financial year. It is down 3.5% in 2022 so far and trading at $285.66 at the time of writing.

ResMed CDI (ASX: RMD)

Sleep treatment company ResMed recognised a series of losses in FY22.

ResMed reversed out of a bullish uptrend in late 2021. The ResMed share price fell from a high of $40.28 on 13 September to a 52-week low of $27.63 in May.

Despite its struggles, several analysts rate the ResMed share price a buy. Fundamentally, they say, the company is strong, and its long-term outlook is attractive.

Morgans is bullish on ResMed and says “nothing changes our medium/longer term view that the company remains well-placed as it builds a unique, patient-centric, connected-care digital platform.”

Meanwhile, analysts at HB Insights are also bullish. They reckon a product recall by ResMed’s competitor is a boon for the company.

“RMD is well positioned to deal with demand supply mechanics and now faces more demand than it can fulfil [with the competitor removed]” the broker said.

“This, along with new product launches as a catalyst, provides the economic pillars for top line expansion over the coming years,” it added.

“We are seeking … a price objective of $245 in the next 6-12 months, and are bullish in the near term amid catalysts described above,” HB Insights concluded.

This ASX healthcare share is trading down 0.92% today at $32.20.

Immutep Ltd (ASX: IMM)

Finally, Immutep is worth a mention in this list. The developer of LAG-3 immunotherapy cancer treatments had a choppy year and landed deep in the red.

Nevertheless, it released several updates across the 12 months regarding its flagship label, known as etfi.

Etfi gained more clinical trial momentum in FY22. It was most recently recognised at the American Society of Clinical Oncology 2022 special edition.

However, ASX investors appear to have overlooked this clinical progress, and have traded the Immutep share price down to a 52-week low of 29 cents on 30 June.

It has now levelled back up to trade at 32 cents.

The post Here’s how ASX healthcare shares performed in FY22 appeared first on The Motley Fool Australia.

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More reading

• Why this broker is tipping the ResMed share price to rise 17%
• Beating the benchmark: Why this broker is betting on the CSL share price for outperformance
• Here’s what happened to the CSL share price in June
• How did the Vanguard Australian Shares Index ETF perform in June?
• Pricing power: 2 ASX shares that can fight stagflation

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 positions in and has recommended CSL Ltd. and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. 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 Janison Education Group Ltd (ASX: JAN) share price is racing higher on Thursday.

In morning trade, the education software provider’s shares are up 13% to 51 cents.

Why is the Janison share price rocketing higher?

Investors have been bidding the Janison share price higher today following the release of a trading update.

According to the release, the company expects to report revenue of $36 million in FY 2022, which represents a 20% or $6 million increase over the prior corresponding period.

While this was driven by growth across all strategic business units, a key highlight was its Assessments business. It reported a 35% increase in delivered tests to 8.7 million for the year.

Janison’s annualised recurring revenue (ARR) continues to grow, albeit at a slower rate. The company’s ARR grew 9% or $2 million to $25 million in FY 2022.

And thanks partly to an 8-percentage points improvement in its gross margin to 64%, Janison is expecting to report positive earnings before interest, tax, depreciation and amortisation (EBITDA) for the full year.

Outlook

Looking ahead, management is very positive on its prospects in FY 2023. Particularly given its streamlined operating model, which is expected to deliver material cost savings this year.

Combined with its positive growth outlook thanks partly to its robust pipeline of new assessment platform clients, management expects to be cash flow positive in FY 2023.

The release concludes:

Management remains confident in the medium-long term outlook for digital assessments (products and solutions) and the Company’s leading position in the market for powering high volume, highly secure and scalable assessments for schools and accreditation customers.

The impact of COVID over the past two years has increased the market size and rate of digital adoption but has pushed out the timing of customers’ willingness to commit to large-scale transformations or deployments due to the extent of disruption in the market and resourcing constraints.

The post Janison share price jumps 13% on FY22 trading update appeared first on The Motley Fool Australia.

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More reading

• Why Block stock cratered by nearly 62% in 2022’s first half
• Time is almost out to secure the Collins Foods dividend. Here’s what you need to do
• Why is the Infomedia share price falling 5% today?
• Bendigo Bank shares rise after going long on leverage with ANZ lending acquisition
• Chalice Mining share price leaps 13% on new exploration results

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 positions in and has recommended Janison Education Group Limited. The Motley Fool Australia has positions in and has recommended Janison Education Group 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 article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of fintech company Block (NYSE: SQ) — formerly known as Square — tanked by 61.9% during the first half of 2022, according to data from S&P Global Market Intelligence. That was a far worse performance than the S&P 500 and Nasdaq Composite indexes, which fell by 21% and 31%, respectively, from their all-time highs. 

So what

There were many reasons for Block’s steep drop. The biggest factor was rising interest rates. In an attempt to get inflation under control, the Federal Reserve in March began lifting its benchmark federal funds rate from the near-zero it had cut it to at the start of the pandemic to an upward limit of 2% as of June. More rate hikes are expected following the next two Fed meetings in July and September. The federal funds rate is still at a historically low level, but the speed and magnitude of the rate changes have dragged down Block and other high-growth but richly valued stocks. There is an inverse relationship between interest rates and the present value of risk assets like stocks. Thus, rising rates generally lead to lower stock prices.

Data by YCharts

Some investors were also skeptical of Block’s bets on the Bitcoin (CRYPTO: BTC) blockchain network — the reason for the corporate rebrand from “Square” to “Block.” It will take years for these efforts to pay off, if they do at all, since there are other competing crypto networks also vying for developer attention. Block also made a big acquisition, picking up “buy now, pay later” outfit Afterpay in an all-stock deal.

And, of course, there are the growing worries that the U.S. may be headed for a recession. The economy has multiple headwinds working against it this year, and some economists think a recession is already underway. If the consumer takes a hit, Block’s growth momentum could be negatively impacted. 

Now what

The good news is that despite all of these issues, Block is still in fast expansion mode as individuals and small businesses rapidly adopt its digital finance platform. Gross profit (revenue minus the cost of revenue) was $1.29 billion in Q1 2022, a 34% year-over-year increase. Profitability, as measured by free cash flow, also rose to $188 million.

After its epic share price decline in the first half of 2022, Block trades for 34 times trailing-12-month free cash flow. That’s still a premium price tag, but if the fintech leader can continue its growth streak over the next few years, it could be a worthwhile value for investors who buy and hold. Just remember to make Block part of a well-diversified portfolio if you do choose to invest in it. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Block stock cratered by nearly 62% in 2022’s first half appeared first on The Motley Fool Australia.

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More reading

• Why are ASX tech shares struggling today?
• Block shares are back on the buy list for this big-name investor

Nicholas Rossolillo has positions in Bitcoin and Block, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Block, Inc. The Motley Fool Australia has positions in and has recommended Bitcoin and Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Collins Foods Ltd (ASX: CKF) share price has been climbing over the past week.

In fact, since the release of the company’s full-year results on 28 June, the restaurant operator’s shares are up by more than 6%.

At the time of writing, Collins Foods share are travelling 0.86% higher for the day to $10.60.

Let’s take a look at what’s driving these gains.

Collins Foods shares set to trade ex-dividend

Despite the volatility impacting ASX shares of late, the Collins Foods share price has continued to rise.

It appears investors have been jumping on board ahead of the ex-dividend date for the company’s shares.

Investors need to buy Collins Foods shares before market close today to be eligible for the final dividend. The ex-dividend date is on Friday 8 July.

Historically, when a company reaches its ex-dividend day, its shares tend to fall after shareholders lock in the latest dividend.

When is payday for Collins Foods shareholders?

For those eligible for the Collins Foods dividend, shareholders will receive a payment of 15 cents apiece on 1 August.

This brings the full-year dividend to 27 cents, and reflects a 17.4% lift from the previous financial year.

The dividend is also fully franked.

Franking credits, or imputation credits, are highly regarded in the investing world. This is a type of tax credit that is passed onto shareholders when dividend payments are made by a company.

In addition, investors can elect for the dividend reinvestment plan (DRP), which will add a portion of shares to their portfolio instead.

There is no DRP discount rate, however price will be determined by the daily volume-weighted average (VWAP) from 13 July to 26 July.

The last election date for shareholders to opt-in to the DRP is 12 July.

Share price snapshot

Since the start of 2022, the Collins Foods share price has travelled more than 20% lower following tough macroenvironmental conditions.

The company’s shares reached a 52-week low of $8.04 last month, before treading higher in the following weeks.

Collins Foods commands a market capitalisation of roughly $1.24 billion and has a dividend yield of 2.36%.

The post Time is almost out to secure the Collins Foods dividend. Here’s what you need to do appeared first on The Motley Fool Australia.

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More reading

• Why is the Infomedia share price falling 5% today?
• Chalice Mining share price leaps 13% on new exploration results
• Bendigo Bank shares rise after going long on leverage with ANZ lending acquisition
• Top 5 outperforming ASX retail shares in FY22 that you may not have heard of
• 1 green flag for Amazon stock

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 positions in and has recommended Collins Foods Limited. The Motley Fool Australia has recommended Collins Foods 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 Infomedia Limited (ASX: IFM) share price is plunging on Thursday after the company announced the highest bidder has dropped out of the multi-horse race to acquire it.

United States-based technology investment firm Battery Ventures has withdrawn its $1.75 per share bid.

At the time of writing, the Infomedia share price is $1.60, 5.04% lower than its previous close.

Let’s take a look at the latest news from the automotive industry software-as-a-service (SaaS) provider.

Infomedia share price falls as Battery Ventures walks

The Infomedia share price is tumbling on news that one of the three parties lined up to take over the company has dropped out of the race.

And not just any of the three – Battery Ventures was the highest bidder.

Its $1.75 per share offer was notably higher than those posed by TA Associates and Viburnum (TA Consortium) and Solera Holdings (Solera). Both of these remaining interested parties have offered just $1.70 per share.

In other news, the company’s board has granted Solera and TA Consortium preliminary due diligence material and access to management. It has also committed to continuing discussions with the potential acquirers to help move their proposals towards binding offers.

The Infomedia share price launched 28.5% in mid-May when TA Consortium put forward its interest in snapping up the company.

The stock surged once more later that month when Battery Ventures jumped on the bandwagon.

Solera, meanwhile, didn’t announce its interest until mid-June.

Both TA Consortium and Solera’s offers are payable in cash. They’re also subject to several conditions, including due diligence and shareholder approval.

Share price snapshot

Fortunately, today’s fall hasn’t been enough to send the Infomedia share price into the long-term red.

The stock is currently 4.5% higher than it was at the start of 2022.

It’s also trading for 9.5% more than it was this time last year.

The post Why is the Infomedia share price falling 5% today? appeared first on The Motley Fool Australia.

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More reading

• Why Appen, Infomedia, PointsBet, and Vicinity shares are storming higher
• 3 ASX All Ordinaries shares having a cracking Monday
• Infomedia share price surges 9% following third takeover approach

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 Infomedia. The Motley Fool Australia has recommended Infomedia. 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 Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is pushing higher on Thursday morning.

At the time of writing, the regional bank’s shares are up 1% to $9.38.

This makes the Bendigo and Adelaide Bank share price the strongest performer among the major banks.

Why is the Bendigo and Adelaide Bank share price rising?

Investors have been bidding the Bendigo and Adelaide Bank share price higher in response to the release of an announcement.

According to the release, the company has agreed to acquire the investment lending portfolio of Australia and New Zealand Banking Group Ltd (ASX: ANZ).

Management believes the acquisition will allow Bendigo and Adelaide Bank to further grow its Leveraged Equities margin lending business. It is already one of the leading and longest established margin lenders in Australia.

The ANZ investment lending portfolio has a value of approximately $715 million, with approximately 11,900 customer facilities. As a result, this acquisition is expected to take the combined value of Bendigo and Adelaide Bank’s margin lending portfolio to more than $2 billion at completion.

Bendigo and Adelaide Bank will pay an “immaterial premium over book value” for the investment lending portfolio, which will be funded through the ordinary course of business operations.

Pleasingly, the acquisition of this high return portfolio is aligned with the bank’s objective of growing its return-on-equity and will be earnings accretive upon completion

The deal is expected to complete in the first half of calendar year 2023.

‘A strong future’

Bendigo and Adelaide Bank’s managing director and CEO, Marnie Baker, spoke positively about the acquisition. She said:

In line with our vision to be Australia’s leading bank of choice, the acquisition will strengthen Leveraged Equities’ position as an industry leader in margin lending and enhance the scale of our existing operations.

The portfolio we are acquiring is well established and primarily comprises retail customers which will complement Leveraged Equities’ client base of professionals and clients under advice. We believe there is a strong future for Margin Lending in Australia, and this acquisition will create further opportunities for growth.

The post Bendigo Bank shares rise after going long on leverage with ANZ lending acquisition appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 bank shares responding positively to higher interest rates?
• What’s going on with ASX 200 bank shares on Tuesday?
• Why did the ANZ share price underperform the ASX 200 in June?
• ASX 200 midday update: Regis Resources jump, big four banks fall ahead of RBA meeting
• How did the Vanguard Australian Shares Index ETF perform in June?

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 positions in and has recommended Bendigo and Adelaide Bank 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 Chalice Mining Ltd (ASX: CHN) share price is soaring 13.3% higher in early trade today.

Chalice Mining shares closed yesterday at $3.75 and are currently trading for $4.25.

This comes after the ASX resource explorer reported on its latest, promising drill results.

What exploration results were reported

The Chalice Mining share price is on the rise after the company revealed it had intersected a new nickel-copper-platinum group element (PGE) sulphide zone at its Julimar Ni-Cu-PGE Project, located in Western Australia.

The visual results come from initial diamond drilling at the Dampier Target, some 10km north of the proven Gonneville Deposit. Assays for the new holes at Dampier are expected within six weeks.

The explorer reported that across three wide-spaced holes it had intersected a 15m to 80m wide zone of disseminated sulphides (averaging 1-3% sulphide), with locally abundant matrix sulphides (up to 20% to 30% sulphide) within an interlayered sequence of ultramafic to mafic intrusive rocks.

Chalice stated:

This is the first significant indication of orthomagmatic sulphide mineralisation outside of the Gonneville Deposit itself and is considered an exciting result which demonstrates the highly prospective nature of the Julimar Complex for additional Ni-Cu-PGE discoveries.

Exploration activities are continuing at the Hartog-Dampier targets. Thirteen of 70 planned diamond drill holes have been completed so far, with assays pending for five holes.

The Chalice Mining share price could be getting an extra boost as the company noted it’s yet to test several high-priority targets at Hartog-Dampier. It currently has four diamond drill rigs at the site with three additional rigs drilling at the Gonneville PGE-Ni-Cu-Co-Au Deposit.

Chalice highlighted that its drilling program in the Julimar State Forest uses “small footprint diamond drill rigs”. The exploration doesn’t entail any mechanised clearing of local vegetation or excavation.

Chalice Mining share price snapshot

Today’s big lift in the Chalice Mining share price will come as welcome news to shareholders who’ve held on during a difficult year.

Despite the boost, shares in the ASX explorer remain down 43% in 2022. That compares to a year-to-date loss of 14% posted by the All Ordinaries Index (ASX: XAO).

Taking a step back, investors who bought Chalice Mining shares on 31 January 2020 – before the onset of the COVID-19 pandemic – will be sitting on gains of almost 1,500%.

The post Chalice Mining share price leaps 13% on new exploration results appeared first on The Motley Fool Australia.

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More reading

• Down 9% in a week, what’s going on with the Chalice Mining share price?
• Chalice Mining share price spikes 6%, reversing series of losses
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Bernd Struben 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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Consumer discretionary has been a tough space in FY22, but there are several ASX retail shares that have delivered big returns.

These companies have managed to defy waning consumer sentiment triggered by the rising cost of living.

The higher-for-longer inflation, interest rate hikes, and falling asset prices are major risk factors for the sector.

Small-cap ASX retail shares outperforming the big end of town

This explains why some of our biggest ASX retail shares have slumped by 20% or more in the past year. This includes the JB Hi-Fi Limited (ASX: JBH) share price and Wesfarmers Ltd (ASX: WES) share price.

However, there have been a number of retail gems at the smaller end of the market that have delivered double-digit returns in the past financial year.

I am not talking about illiquid micro-caps, where a single trade can drive their share prices into the stratosphere. These are ASX consumer discretionary shares with a market cap of at least $100 million.

The top-performing ASX retail shares in FY22

What’s more, you probably haven’t heard of some of these names. And in another blow to our Aussie ego, a few of these are New Zealand businesses listed on the ASX!

The best performing ASX retail share in FY22 is Mydeal.Com Au Ltd (ASX: MYD). The online retailer surged just over 60% over the financial year.

What really helped was Woolworths Group Ltd (ASX: WOW) buying an 80% interest in the company as opposed to operational growth. But a win’s a win!

The second top performer for the year is NZME Ltd (ASX: NZM). The Kiwi media and entertainment group managed to deliver a 41% increase in share value.

This will be enough to embarrass its Aussie peers like Nine Entertainment Co Holdings Ltd (ASX: NEC) and Seven West Media Ltd (ASX: SWM). Nine fell 29% while Seven is about flat over the period.

More Kiwis beating the Aussies

But NZME isn’t the only New Zealand media share to be shooting the lights out. In third spot is the SKY Network Television Limited (ASX: SKT) share price with its gain of around 32% for the year.

Adding insult to Aussie injury is New Zealand-founded jeweller Michael Hill International Ltd (ASX: MHJ). The ASX retail share jumped around 27% in value thanks to strong sales across all of the company’s markets and its ability to hold margins.

Meanwhile, the Supply Network Limited (ASX: SNL) share price isn’t far behind with a gain of around 24%. This is no doubt helped by the Australian and New Zealand auto parts retailer issuing a pleasing FY22 sales and profit guidance.

The post Top 5 outperforming ASX retail shares in FY22 that you may not have heard of appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau 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 Supply Network Limited. The Motley Fool Australia has positions in and has recommended Supply Network Limited and 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 article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Amazon (NASDAQ: AMZN) has gone through a volatile stretch over the last few years. The surge in customers and sales at the pandemic‘s onset has been followed by decelerating growth and rising costs. Amid all of that was a change in CEOs and a stock split.   

But none of the above are reasons to buy. Instead, the green flag I will discuss is the massive customer commitments it has for its lucrative Amazon Web Services (AWS) segment, the primary driver of Amazon’s profitability these days.

$89 billion worth of signed contracts

As of March 31, Amazon’s web services segment has contracts with customers for a total value of $88.9 billion. In other words, customers are committed to spending $89 billion on Amazon Web Services over the next few years. To put that figure into context, in its most recent quarter (ended on March 31), AWS generated revenue of $18.4 billion. That was a 37% increase from the same quarter in the prior year. What’s more, it was an acceleration of the 32% growth it achieved in the same quarter of last year. Note that contractual obligations turn into revenue as customers use the service they agreed to buy.

Significantly, on that $18.4 billion in AWS revenue, Amazon earned an operating income of $6.5 billion. Amazon’s other two segments, North America and international, generated an operating loss of $1.6 billion and $1.3 billion, respectively, in the quarter ended in March. These two segments are suffering the effects of economic reopening as consumers spend more of their money at brick-and-mortar retailers. Besides the losses in this most recent quarter, the two segments are notoriously lower-profit-margin businesses.

AMZN Operating Margin (Annual) data by YCharts

It’s great news for Amazon that its more profitable segment is accelerating revenue growth and has a massive backlog of customer demand to fulfill. While its other segments may continue facing headwinds from the economic reopening, AWS continues to thrive. Indeed, the growth of AWS to a more considerable portion of Amazon’s overall business has boosted its operating profit margin over the last decade. 

A great time to buy Amazon’s stock 

That’s creating an opportunity for long-term investors. The market has punished Amazon’s stock, which is down 41% off its highs in 2021. Investors are concerned about decelerating growth of retail sales domestically and internationally. However, that might arguably be overlooking where the value comes from in Amazon’s stock. AWS is where the bulk of profits will come from, and that segment is accelerating.

AMZN PE Ratio data by YCharts

Amazon is trading at a price-to-earnings ratio of 53, near the lowest that investors have been able to buy Amazon stock in the last five years. The worries over its online sales deceleration have created an excellent opportunity for long-term investors to buy Amazon stock — a green flag, to be sure. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Parkev Tatevosian has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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