Tag: Motley Fool

The Seek Ltd (ASX: SEK) share price is taking a beating on Tuesday morning as investors react to the company’s FY24 first-half results.

Shares in the online employment marketplace are down 10% to $24.25 when writing. The significant fall erases much of the ground made in the Seek share price since late October 2023. Only last month, the company’s shares breached a fresh 52-week high of $26.98.

Dent in job ads taking the Seek share price down

Here are the key takeaways from Seek’s latest half-year posting:

• Australian and New Zealand (ANZ) paid job ads down 20% (shown below)
• Revenue down 5% from the prior corresponding period to $596.8 million
• EBITDA down 11% to $252.9 million
• Adjusted net profits after tax (NPAT) from continuing operations down 24% to $107.5 million
• Interim dividend of 19 cents per share, down 21%

Shrinking from $626.7 million in revenue from continuing operations in the previous first half, Seek’s profits carried the cost as its operating expenses remained relatively flat.

The bulk of the damage was inflicted in the company’s ANZ region. Being the largest revenue source, a 10% reduction to $412 million in ANZ revenue had an outsized impact on Seek in the first half. However, the company managed to squeeze improved proceeds from the smaller base of job ads through:

• Increased variable ad pricing
• Broader use of Seek offerings
• Favourable shift in customer mix

Despite the ‘more with less’ achievement — and a 2% increase in Asia revenue ($123 million) — it was not enough to offset the weakness in job advertisement volumes.

What else happened in the half?

On 15 November 2023, Seek held its annual general meeting with shareholders. Filling investors with optimism, management highlighted ‘significant growth potential‘ within the presentation, commanding a 7% leap in the Seek share price on the day.

Moreover, full-year FY24 guidance was unveiled at the AGM. At the time, management forecasted revenue between $1.18 billion and $1.26 billion. In addition, adjusted NPAT was assigned a range of $220 million to $260 million.

Today, Seek has shared revised expectations of the following:

• Revenue between $1.15 billion to $1.21 billion, 3.3% lower at the midpoint
• Adjusted NPAT between $190 million and $220 million, 14.6% lower at the midpoint

What did Seek management say?

Undeterred by the weaker results, Seek CEO and managing director Ian Narev pitched the positive from the platform unification, stating:

The highlight of this period was the delivery, ahead of time of the unified product and technology platform that will provide the foundation of our future growth. The crucial delivery stage of the project were completed exactly as planned. We can now turn our focus from the project management to realisation of the significant benefits that the platform can deliver: faster innovation and economies of scale.

Some of these benefits, as mentioned in today’s presentation, include the ability to post ads across the entire Asia Pacific; advanced search and discovery using AI for candidates; and variable pricing in Asia.

What’s next?

Setting expectations for the next half, Seek noted ANZ job ad volume declines could persist, with mid-teen projected. However, a further 10% increase in yield is forecast to combat some of the continued softening.

Conversely, management believes costs will be lower than originally anticipated, at $670 million in FY24.

Seek share price snapshot

The Aussie benchmark, the S&P/ASX 200 Index (ASX: XJO), has returned 2.5% before dividends over the past year. Unfortunately, despite its bustling between $20 and $27, the Seek share price is producing a subpar performance, now basically flat over the same period.

The post Seek share price sinks 10% as hiring slowdown hits earnings appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• How high could the ResMed share price climb?
• Announcing Motley Fool’s Financial Literacy Week Event
• Guess why this ASX 200 energy stock is crashing 30% today
• How has the Arafura share price gained 13% today?
• Challenger share price rockets 10% on half-year earnings

Motley Fool contributor Mitchell Lawler 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 Seek. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/WKlkwCe

The ResMed Inc (ASX: RMD) share price has been on form in recent months.

So much so, the sleep treatment focused medical device company’s shares have risen 28% since the end of October.

You may now be thinking that you’re too late to the party, but is that the case? Let’s find out what analysts are saying.

Can the ResMed share price keep rising?

The good news is that brokers remain very bullish on the company and continue to see material upside for investors over the next 12 months.

For example, the team at Morgans currently has an add rating and $32.82 price target on its shares. This implies potential upside of 18% for investors.

Morgans is so positive, it has the company’s shares on its best ideas list in February. It said:

While weight loss drugs have grabbed headlines and investor attention, we see these products having little impact on the large, underserved sleep disorder breathing market, and do not view them as category killers. […] the company remains well placed and uniquely positioned as it builds a patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.

Over at Goldman Sachs, it put a buy rating and $33.50 price target on the ResMed share price. Though, it is worth highlighting that its analyst has since left and the broker has suspended coverage for the time being.

Finally, the team at Citi is even more bullish with its buy rating and $34.00 price target, which implies 24% upside for investors. Its analysts recently said that they “view the shares as oversold” and maintain their buy rating.

All in all, while the ResMed share price has been on a strong run recently, the broker community doesn’t appear to believe that it is too late to jump in at current prices.

The post How high could the ResMed share price climb? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 3 ASX shares this fund manager thinks are compelling buys right now
• Here’s how the ASX 200 market sectors stacked up this week
• Morgans says these ASX 50 shares are strong buys
• 5 ASX shares I think you can confidently invest $500 in right now
• What’s happening with the ResMed share price on Wednesday?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/qRInPkr

I’m bloody lucky. I have, I’m pretty sure, the best job in the world.

I love business and investing.

I love analysis, and working out the relationship between different factors.

I love writing (and, as they say, it forces you to work out what you really think, which is a wonderful benefit).

And I love helping people get the most from their finances.

It might not surprise you that at one point I considered becoming a teacher (the kids are probably glad I didn’t!).

And why am I lucky?

Well, I have a job, and an employer, that lets me do all of that.

Sometimes, I write about investing. Sometimes about business. Sometimes about the economy. And sometimes about economic policy.

That’s a very broad remit. 

And when I do, my aim is to improve things – for our members and readers, obviously, but also for our broader society.

Why?

Well, selfishly on behalf of those people, a better society is better for all of us, including investors.

But also because I think we have a moral responsibility to do so.

Now, it’s impossible to divorce those two things, of course.

If I help people grasp the power of investing, of course some are going to join The Motley Fool.

And, I think we can help them, so I’m good with that.

But also, many won’t. Many will find other ways to use the insights I try to provide. And that’s totally fine with me.

Which is all preamble. Hopefully useful context, too.

Because I’m really pleased to let you know that The Motley Fool has decided to run a free week of live webinars, on YouTube, that we’re calling Financial Literacy Week.

Our aim?

To help people get their financial lives in order.

To give them (you?) the information and tools they need to wrest back control, and to set themselves on the right path.

Why?

I mean, it’s good for our brand. It exposes more people to our business. Those things are undoubtedly true. We might eventually get some of those people to become members of one of our services.

But if it was just about making a sale, we’d find some ‘shorter putts’. We’d throw more resources into getting current investors to use us. Or potential investors to start investing with us.

But we’re doing it, primarily, because we think we can help people who want to take control of their finances, but don’t know where to start.

And if we can, we think we should.

So we are.

Maybe you could benefit from rebooting your finances. Or maybe you know someone else who could. Or someone who needs to know what healthy financial habits look like.

That’s what we’re aiming to do.

Here’s what you need to know:

• Financial Literacy Week is free.

• It runs from February 26 to March 1.

• Each day that week, we’ll be live on YouTube.

• I’ll give you some actionable insights to help you get your financial life (back) on track.

• And we’ll answer as many of your questions as we can!

No, there are no silver bullets. And there’s no secret strategy.

You will have heard most of it before, too.

But our aim is to give it to you straight, in an easy-to-follow format.

Because, sometimes all we need is a bit of a push, and a few simple steps to follow.

That’s how you get the financial snowball rolling. And once it does, the results can be astounding.

I’m really excited we’re doing this – and proud that The Motley Fool is behind it.

I hope you’ll join us (and please let your friends and family know if you think they might benefit from it, too!)

Did I mention it’s free?

Click here to RSVP and get all of the details!

The post Announcing Motley Fool's Financial Literacy Week Event appeared first on The Motley Fool Australia.

More reading

• Seek share price sinks 10% as hiring slowdown hits earnings
• How high could the ResMed share price climb?
• Guess why this ASX 200 energy stock is crashing 30% today
• How has the Arafura share price gained 13% today?
• Challenger share price rockets 10% on half-year earnings

Motley Fool contributor Scott Phillips 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.

from The Motley Fool Australia https://ift.tt/Vn5kXLb

The Strike Energy Ltd (ASX: STX) share price has returned from its trading halt and crashed deep into the red.

In early trade, the ASX 200 energy stock dropped over 30% to 29 cents.

Why is this ASX 200 energy stock crashing?

Investors have been rushing to the exits today after the company released an update on well testing activities at South Erregulla.

According to the release, South Erregulla-3 (SE-3) was completed with production tubing and the primary zones in the Kingia Sandstone were perforated on Monday 5 February 2024.

Upon opening the choke, the well failed to flow but was also observed to be substantially overbalanced.

Management advised that in response, it proceeded to plug off the zones and mobilise nitrogen to displace the well fluid and move the well into an under-balanced state.

Early in the evening of 8 February, the plug was removed with no initial flow. The release reveals that the well was then shut-in and a steady increase in tubing head pressure and associated temperature drop was subsequently observed, where bleed offs of gas were detected as hydrocarbons.

Strike advised that it then ran slickline where it observed a fluid level at ~250m from the surface, which indicates that reservoir fluid had been produced.

Unfortunately, Strike interprets this as having encountered a possible gas-water contact in the SE-3 well. Several samples of this fluid and gas have been collected for further analysis.

‘Disappointing’

The ASX 200 energy stock’s Managing Director & Chief Executive Officer, Stuart Nicholls, revealed his disappointment with the news. He said:

The SE-3 flow test has not matched its petrophysical interpretation, which is disappointing. Further analysis and data collection is ongoing and Strike is reviewing the potential to return to the well.

Though, Nicholls remains upbeat on the future, adding:

Looking forward, Strike will be drilling the Walyering-7 and Erregulla Deep-1 wells in this half, which have the potential to add material 2P developed and undeveloped volumes on success. Also, of note Strike has commenced its Ocean Hill 3D seismic acquisition which may provide the well location for the contingent appraisal well Ocean Hill-2 later in the year.

The post Guess why this ASX 200 energy stock is crashing 30% today appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• How has the Arafura share price gained 13% today?
• Challenger share price rockets 10% on half-year earnings
• CSL shares tumble despite first-half earnings beat
• Should you buy into an IPO or wait until shares start trading on the ASX?
• Up 115% in a year, Temple & Webster share price soars again today on record revenue

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.

from The Motley Fool Australia https://ift.tt/53zUs0B

It’s been a shaky start to this Tuesday’s trading for the All Ordinaries Index (ASX: XAO) and most ASX All Ords shares so far. At the time of writing, the All Ords has slipped by 0.07%. But let’s talk about what’s happening with the Arafura Rare Earths Ltd (ASX: ARU) share price.

The Arafura share price is on fire today. The rare earths developer closed at 12 cents each yesterday afternoon. But this morning, Arafura climbed all the way up to 14.3 cents, a gain worth a stonking 13.6% at the time. Since then, the company has cooled off a little but is presently still up a healthy 8% at 13.5 cents apiece.

So what on rare earth is going on here?

How has this All Ords stock rocketed 13% today?

Well, it seems to be a consequence of the announcement that the company made yesterday after market close.

Arafura revealed that it has signed a new gas supply agreement. This agreement has been reached with the Mereenie joint venture, which is made up of Central Petroleum Limited (ASX: CTP), Cue Energy Resources Limited (ASX: CUE), Macquarie Mereenie and New Zealand Oil & Gas Ltd (ASX: NZO).

Under the agreement, the joint venture will supply Arafura’s Nolans Project with up to 27.41 petajoules of natural gas for a three-year term, beginning in 2026. This term also has an option for a two-year extension.

Macquarie Mereenie will supply most of the gas, contributing 13.7 petajoules. 6.85 petajoules will come from Central Petroleum, 4.8 from New Zealand Oil & Gas, and 2.06 from Cue Energy.

This deal reportedly includes “take-or-pay provisions and fixed pricing, with allowances for escalation in line with the consumer price index”.

It also hinges on a few conditions that are to be satisfied before 30 June 2024. These include the “execution of a gas transport agreement”, the “execution of a power purchase agreement”, approvals, permits and licenses being granted, and the “finalisation of debt financing”.

Here’s some of what Arafura’s managing director Darryl Cuzzubbo had to say:

We are pleased to confirm the terms of gas supply for Nolans. Ensuring access to local natural gas is a positive step in the development of this major project, which will see critical rare earth minerals from the Northern Territory delivered to customers around the world in support of energy transition initiatives.

Arafura Rare Earths share price snapshot

Despite today’s strong rise (investors evidently approve of today’s announcement), the Arafura share price has had a tough year.

The company remains down almost 78% over the past 12 months, as well as down more than 20% in just 2024 to date.

The shares are also a lot closer today to the 52-week low of 12 cents that we’ve seen just this week than its 52-week high of 70 cents a share.

The post How has the Arafura share price gained 13% today? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Arafura share price resets 52-week low after quarterly update

Motley Fool contributor Sebastian Bowen 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.

from The Motley Fool Australia https://ift.tt/sFSYwNh

The Challenger Ltd (ASX: CGF) share price ripped 10% higher in early trading and is the leading stock of the ASX 200 at the time of writing on Tuesday.

It seems that ASX investors are receiving the investment manager’s FY24 half-year results with glee.

The Challenger share price opened at $6.88 and quickly rose to a high of $7.23, up 9.88% on yesterday’s close. It is now trading at $7.10, up 7.9%.

Let’s check out the report.

Challenger share price leaps on news of 16% profit boost

Here are the highlights for the six months ending 31 December 2023:

• Normalised net profit before tax (NPBT) of $290 million, up 16% on the prior corresponding period (pcp) of 1H FY23
• Statutory net profit after tax (NPAT) of $56 million, up 80% pcp
• Total assets under management (AUM) $117 billion, up 18%
• Normalised pre-tax return on equity (ROE) of 15%, up 270 basis points
• Interim dividend 13 cents per share fully franked, up 8% pcp.

What else happened in 1H FY24?

Challenger said it is making significant progress in executing its growth strategy.

Life book growth and strong funds management net inflows lifted the AUM by 18%.

Its retirement income business, Challenger Life, recorded $5.3 billion in sales and a 330 basis-point increase in ROE.

Challenger achieved a record in new business annuity sales of $1.9 billion, up 19% on last year.

CEO Nick Hamilton said this demonstrated Challenger’s focus on driving more profitable, longer-duration
business, with 90% of new business annuity sales for terms of two years or more.

“This in turn is extending the tenor of our Life book, which will support higher, longer term profitability,” he said.

The sales tenor averaged 8.9 years in 1H FY24 compared to 5.4 years in 1H FY23.

Lifetime annuity sales also went up by 190% to $1.1 billion.

What did Challenger management say?

Hamilton commented that Challenger’s opportunity in the Australian retirement sector “is extraordinary”.

Australia is now firmly focused on strengthening the retirement phase of superannuation. As more Australians live longer and retire in ever greater numbers, there will be more demand, across more channels for a broader range of retirement income solutions.

Hamilton said Challenger has positioned itself to take advantage of this over the past two years.

… our achievements in the first half of 2024 demonstrate that we are now delivering on that opportunity.

In Life, we are driving growth across a broader range of channels, including deepening our relationships with superannuation funds.

Our retirement partnership with Commonwealth Super Corporation and the launch of TelstraSuper’s lifetime pension, designed in partnership with Challenger, demonstrate our expertise in developing retirement and longevity solutions that address the specific needs of members in retirement.

What’s next for Challenger?

Challenger reaffirmed its FY24 normalised net profit before tax guidance of $555 million to $605 million.

The company said it expects to reach the top half of that guidance.

The guidance range excludes Challenger Bank, which has been sold.

Challenger expects the sale to be completed in 2H FY24, subject to regulatory approvals.

Challenger share price snapshot

The Challenger share price is down by 2.2% over the past 12 months.

This compares to a 2.7% increase for the S&P/ASX 200 Index (ASX: XJO).

The post Challenger share price rockets 10% on half-year earnings appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Guess why this ASX 200 energy stock is crashing 30% today
• How has the Arafura share price gained 13% today?
• CSL shares tumble despite first-half earnings beat
• Should you buy into an IPO or wait until shares start trading on the ASX?
• Up 115% in a year, Temple & Webster share price soars again today on record revenue

Motley Fool contributor Bronwyn Allen 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 Challenger. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/8Gj1INr

CSL Ltd (ASX: CSL) shares are under pressure for a second day in a row.

On Monday, investors were selling the biotechnology company’s shares following a major trial failure.

Today, the selling has followed the release of CSL’s highly anticipated half-year results.

How did CSL perform during the first half?

CSL had a relatively strong six months, reporting double-digit revenue and profit growth in constant currency.

The company posted an 11% increase in revenue to US$8.05 billion and a 13% jump in net profit after tax before amortisation (NPATA) to $2.06 billion.

This allowed its board to increase CSL’s interim dividend by 12% to the equivalent of A$1.81 per share.

It also allowed management to reaffirm its FY 2024 guidance. It continues to expect NPATA expected in the range of approximately US$2.9 billion to US$3.0 billion in constant currency, representing growth over FY 2023 of approximately 13% to 17%.

Why are CSL shares falling?

Interestingly, CSL shares are falling today despite the company’s result actually coming in slightly ahead of expectations for the half.

According to FactSet, the market was expecting revenue of US$7.94 billion and net profit of US$1.84 billion. Whereas CSL reported a statutory net profit of US$1.9 billion and revenue of US$8.05 billion.

It’s possible that the weakness has been driven by commentary around the outlook for the CSL Vifor business. Management warned:

For CSL Vifor, we are operating within an evolving iron market. While there are challenges for near-term growth, we are well positioned for iron competition in the EU and further geographic expansion. Our focus remains on unlocking value by leveraging capabilities across the CSL group.

This isn’t the sort of thing you want to hear 18 months after acquiring a business for A$16.7 billion.

The post CSL shares tumble despite first-half earnings beat appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• CSL share price on watch amid 20% profit jump
• 5 things to watch on the ASX 200 on Tuesday
• CSL shares could pop 9% on surprising results if history repeats itself
• Why CSL, Fletcher Building, Skycity, and Wildcat shares are falling today
• CSL share price sinks 6% on major trial failure

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/NxAqawG

An initial price offering, or IPO, can be one of the most exciting events on the ASX. An ASX share debuting on the stock market for the very first time, finally giving investors the chance to own shares of a company that was previously unavailable to the public… what’s not to like?

IPOs tend to happen multiple times a year on the ASX, although their frequency usually ebbs and flows alongside the fortunes of the markets themselves.

But are IPOs really a good investment? Should investors participate in them? Or should they wait until the shares hit the markets and establish themselves before it’s worth picking some up?

Today let’s discuss these concepts.

What is an IPO?

An IPO is the primary way a company that was previously privately owned can launch its shares for public trading on the stock exchange.

This can benefit the company enormously, by unlocking additional capital and a wider investment base. In this way, companies often IPO to raise money for further expansion.

The process is relatively simple. A large chunk of a company’s shares that were previously either owned by its management or founders, or by a small group of early investors, are diluted into new shares. Then, they are offered up for public exchange at a set price. When these shares begin trading on the markets, other investors can then buy them.

Often, a company will offer some of these shares to investors before they begin public trading. That way, the investors that have been selected can trade their shares on the first day they hit the ASX boards.

Some companies offer these shares to their own customers. Others just let anyone apply.

But if you get the chance to do this, should you?

Buying pre-IPO shares

I tend to think that participating in an IPO is a bad idea for almost every investor. There are a couple of reasons why.

Firstly, IPOs are usually set up to benefit the founders or previous owners of a company as much as possible. Possibly to the detriment of new investors. The pre-market prices that the shares will be offered to you at will almost certainly be set at an optimistic valuation.

After all, why would an IPO hopeful undersell its potential to new investors? Not to mention deliberately handicap the amount of cash it could raise during the IPO.

I’ve never seen an IPO take place where the company ludicrously undervalues its own stock. But I’ve seen many many where the newly listed shares drop in value fairly quickly upon IPO thanks to some overly optimistic accounting.

Avoiding unnecessary volatility

Secondly, IPO trading is notoriously volatile. When a company first begins stock market trading, you have a flurry of investors all trying to value something that hasn’t been valued in a public market before. This can lead to wild swings in an IPO share price, which can last for several days before settling down.

If you’re a new investor whose already picked up shares, this stock volatility can be very offputting. Say a company that you’ve bought at IPO for $1 a share drops to 80 cents on its first day of trading. You might be influenced to think you’ve made a big mistake, and thus tempted to sell out immediately.

All in all, I’ve seen far more investors get burned from an IPO than do well. Myself included. As such, I think it’s far better for anyone wanting to participate in an IPO to instead sit on the sidelines for at least a few days. Watch what happens, and make an investment when the shares are trading at a price that makes sense for you.

It can be fun to participate in an IPO. But it can also be a wealth hazard more often than not.

The post Should you buy into an IPO or wait until shares start trading on the ASX? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• CSL shares tumble despite first-half earnings beat
• Up 115% in a year, Temple & Webster share price soars again today on record revenue
• Breville share price crashes 13% on guidance miss
• Beginners: Here are 2 ASX dividend stocks to get your portfolio started!
• Macquarie share price sinks on ‘substantially’ lower profits

Motley Fool contributor Sebastian Bowen 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.

from The Motley Fool Australia https://ift.tt/yJcIiTD

The Temple & Webster Group Ltd (ASX: TPW) share price is running hot today.

Again.

Shares in the online furniture and homewares retailer closed yesterday trading for $10.02. In early morning trade on Tuesday, shares are swapping hands for $10.65 up 6.3%.

For some context, the All Ordinaries Index (ASX: XAO) is up 0.1% at this same time.

This comes following the release of the company’s half-year results for the six months ending 31 December (H1 FY 2024).

Here are the highlights.

Temple & Webster share price leaps amid surging revenues

• Record half-year revenue of $254 million, up 23% year on year
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 3% from H1 FY 2023 to $7.5 million
• The EBITDA margin of 2.9% came in at the top end of full-year guidance of 1% to 3%
• Closing cash balance of $114 million and no debt as at 31 December

What else happened during the half year?

The company noted that the all-time high half-year revenue it achieved was driven by growth in both repeat and first-time customers. Second quarter revenue was up 40%, with management crediting a strong Black Friday-Cyber Monday sales period.

The Temple & Webster share price also looks to be getting a boost with that momentum carrying into the second half of the financial year. From 1 January through to 11 February trading was up 35% year on year.

In August, Temple & Webster outlined a strategy to target annual sales of at least $1 billion within three to five years.

The six-month period saw the online retailer’s private label division launch 500 new products spanning all of its key categories.

And after eight years as chief financial officer, Mark Tayler announced that he will be stepping down as CFO.

What did management say?

Commenting on the record half-year revenue sending the Temple & Webster share price leaping higher today, CEO Mark Coulter noted, “This was in the face of some of the toughest headwinds to our category we have ever seen due to the current economic conditions.”

Coulter added:

Pleasingly, our growth was driven by both first-time customers and repeat customers, which led to us crossing the 1 million Active Customer mark in February this year. This means that our amazing range, great value proposition and incredible service has resonated with 1 million Australians in the last 12 months…

Our goal is to achieve scale as quickly as possible while remaining profitable, and our EBITDA result of $7.5 million for the first half of the year, even after costs associated with the above-the-line brand investment, gives us confidence to invest in growth to take further market share. The online market remains under-penetrated in Australia.

What’s next for Temple & Webster?

Looking at what may impact the Temple & Webster share price in the months ahead, the company cited its strong balance sheet strengthened “even after the additional brand investment and the buyback program”.

Management said this opens the door to potentially pursue new opportunities, support its growth plans and “fund sensible capital management initiatives such as our ongoing share buy-back program”.

The company reaffirmed its full FY 2024 EBITDA margin guidance of 1% to 3%.

Temple & Webster share price snapshot

With today’s intraday lift factored in, the Temple & Webster share price is up a whopping 115% over the past 12 months.

The post Up 115% in a year, Temple & Webster share price soars again today on record revenue appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Shares vs. property: 3 furniture retailers hit 52-week highs amid continually rising home values
• 3 high-growth ASX shares that could be worth $2 billion in 10 years — or sooner
• 2 ASX growth shares I bought for explosive growth

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 Temple & Webster Group. The Motley Fool Australia has recommended Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/I5iT4Sm

The Breville Group Ltd (ASX: BRG) share price is having a day to forget on Tuesday.

In morning trade, the appliance manufacturer’s shares are down 13% to $23.72.

This follows the release of Breville’s half-year results before the market open.

Breville share price sinks on half-year update

Here’s how the company performed during the six months ended 31 December:

• Revenue rose 2% to $905.8 million
• Gross profit up 6.7% to $332 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) up 12.2% to $159.2 million
• EBIT up 8.2% to $131 million
• Net profit after tax up 6.7% to $84 million
• Fully franked dividends per share up 6.7% to 16 cents

What happened during the half?

During the half, Breville reported a 2% increase in revenue to $905.8 million. This reflects a modest 1.6% lift in Global Product sales to $782.8 million and a 4.6% increase in Distribution revenue to $123 million.

Breville’s Global Product segment’s growth was held back by softer sales in the APAC and Americas regions, which offset strong revenue growth in the EMEA region. Management blamed its APAC weakness largely on the ANZ market, which overshadowed a strong half in Asia.

Pleasingly, the company was able to optimise gross profit and contain operating expenses to deliver a 12.2% increase in EBITDA. And while its net profit after tax grew at a slower rate of 6.7% due to higher borrowing costs, management expects these to reduce in the second half of the year as net debt decreases.

How does this compare to expectations?

The company’s results were a touch mixed compared to expectations, which may explain some of the weakness in the Breville share price today.

Goldman Sachs notes that Breville missed on the top line but beat consensus estimates on the bottom line. It said:

BRG reported 1H24 this morning with group sales A$906mn (+2.0% YoY, -5% vs GSe and Visible Alpha consensus), and EBIT A$131mn (+8.2% YoY, 0% vs GSe and +2% Visible Alpha consensus). EPS of A$59 cents was -3% vs GSe.

Outlook

The company’s outlook commentary is likely to be the main reason why the Breville share price is tumbling today. Management warned:

Macroeconomic and mean reversion headwinds are expected to continue through the second half. The Group will have new product launches in the second half and the continued regional rollout of products already launched. In this uncertain environment the Group will continue to focus on gross profit dollars while continuing to invest for medium-term growth.

It expects this to lead to earnings before interest and tax (EBIT) growth of 5% to 7.5% for FY 2024.

Goldman Sachs notes that this guidance is short of expectations. It said:

FY24 EBIT growth guidance was given at +5.0% – +7.5% vs pcp, implying range of A$181mn to A$185mn, which is -5.7% vs -3.5% vs GSe

The Breville share price remains up 13% over the last 12 months.

The post Breville share price crashes 13% on guidance miss appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here’s why these ASX 200 growth shares could be top buys

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 Goldman Sachs Group. 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.

from The Motley Fool Australia https://ift.tt/pUiQs7m