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The Aussie Broadband Ltd (ASX: ABB) share price is having a very disappointing start to the week.

In afternoon trade, the growing telco’s shares are down 25% to $4.17.

Though, it is worth highlighting that even after this huge decline, the Aussie Broadband share price is still up 38% over the last 12 months.

Why is the Aussie Broadband share price crashing today?

Investors have been selling down the Aussie Broadband share price today amid a market selloff and the release of an update out of the telco.

In respect to the latter, the company provided investors with an update on its performance during the third quarter. This revealed that Aussie Broadband has continued its solid growth during the period.

For example, total broadband services increased 11% quarter on quarter or 47% year on year to 548,911 services. Combined with voice, mobile, Fetch, and managed services, this took its total services to 697,083. This represents a 10% quarter on quarter increase and a 42% lift year on year.

Aussie Broadband’s Managing Director, Phillip Britt, commented: “The company has delivered consistent broadband services growth over the last three quarters, and this financial year is on track to be our largest ever for net broadband service additions. This growth is extremely pleasing in a market which is no longer growing and is reliant on customers choosing Aussie and switching from other providers to win market share.”

“The third quarter remained strong for new white label services, assisted by the largely complete migration for our white label customer. We expect to see continued organic growth in this segment as our white label customer secures ongoing sales driven by industry leading customer service,” he added.

Why the selloff?

There are a few potential reasons, outside the market selloff, for the weakness in the Aussie Broadband share price today.

In the Residential broadband segment, management advised that media buyers have warned that marketing efficiency will be materially impacted during the Federal Election. As a result, the company is stepping back its marketing activities, which is expected to reduce new sales.

Management also advised that it has been struggling to recruit for its call centre during a period of strong growth, white label migration, and recent network outages. This led to a jump in call volume and wait times for customers, which resulted in increased customer churn late in the third quarter.

Another headwind the company has been facing is in the mobile business. It notes that gaining mobile-only customers is proving challenging due to supply chain issues impacting the availability of mobile handsets.

Any else?

Also potentially weighing on the Aussie Broadband share price today is its Connectivity Virtual Circuit (CVC) expense.

With customer usage remaining high, third quarter CVC expense more than doubled quarter on quarter to $4.9 million from $1.8 million. And while the company was forecasting a rise, this was still 18% greater than its estimates. Management blamed the rise on increased peak time customer usage.

Finally, Aussie Broadband has downgraded the top end of its earnings and active broadband connections guidance ranges for FY 2022.

Instead of full year earnings before interest, tax, depreciation and amortisation (EBITDA) of $27 million to $30 million, it now expects EBITDA to be in the range of $27 million to $28 million. This guidance excludes transaction costs and any contribution from the Over the Wire acquisition.

Whereas total active broadband connections are expected to be in the range of 580,000 to 585,000. Once again, the top end of its range has been trimmed from 580,000 to 590,000 previously.

The post Here’s why the Aussie Broadband share price is crashing 25% today appeared first on The Motley Fool Australia.

More reading

• Best ASX shares to buy in May 2022
• 3 ASX All Ordinaries shares rocking all-time highs today

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 Aussie Broadband Limited. The Motley Fool Australia has recommended Aussie Broadband 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 Macquarie Group Ltd (ASX: MQG) share price is falling in sympathy with the market today, but the sentiment could turn this Friday when it hands in its earnings report.

Shares in the investment bank tumbled 2.3% to $202.33 during lunchtime trade when the S&P/ASX 200 Index (ASX: XJO) shed 1.7%.

The market is under pressure following large falls on Wall Street on Friday, although JPMorgan is tipping a good profit result from Macquarie on 6 May.

What to expect from Macquarie’s profit results

That is when the bank is scheduled to report its full-year result. The broker is highlighting a few key areas to watch.

“While [Macquarie] hasn’t provided full-year guidance, divisional outlook commentary implies very strong earnings growth,” said JPMorgan.

“We forecast FY22 NPAT of $4.496b (in line with consensus), +49% y/y, with a final div of 360cps (56% payout).”

Earnings growth drivers

The final dividend estimate represents a 7.5% increase over this time last year when management paid $3.35 a share.

The strong result is driven by a few factors. The group’s Commodities and Global Markets (CGM) division is tipped to benefit from very high commodity prices and price volatility.

The broker reckons this business will deliver a 27% uplift in income in FY22. That’s above the implied growth rate of 15% to 25%.

Macquarie’s revenue will also be boosted by the Macquarie Capital division. This business is set to benefit from higher asset sale gains, especially in green energy assets.

Additionally, the group’s Banking and Financial Services (BFS) arm is also forecast to deliver ongoing growth, according to JPMorgan.

Key risk areas with Macquarie’s earnings report

But it isn’t all good news. Uncertainty and weakness in the Macquarie Asset Management (MAM) business could weigh.

“The only division where we see lower earnings hoh [half-on-half] is MAM, due to non-recurrence of one-off income,” said the broker.

“Given macro uncertainty, we think it is unlikely MQG will give FY23 guidance at this result (a repeat of last year).”

What is the Macquarie share price worth?

The broker pencilled in a 6% drop in Macquarie’s FY23 net profit to $4.2 billion, which is close to consensus estimates.

Despite this, JPMorgan recommends the Macquarie share price as “overweight”. Its 12-month price target is $227 a share.  

The post Own Macquarie shares? Here’s what to watch when the bank reports this week appeared first on The Motley Fool Australia.

More reading

• Why is the Macquarie share price getting hammered today?
• Own the Vanguard Australian Shares High Yield ETF? Here’s what you’re invested in
• Why this broker tips the Macquarie share price to clip $227 this year
• How ASX dividend shares can provide support through periods of uncertainty
• These are the 2 best ASX dividend shares to buy right now: fund manager

Motley Fool contributor Brendon Lau has positions in Macquarie Group Limited. 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 Macquarie 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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There aren’t a whole lot of S&P/ASX 200 Index (ASX: XJO) shares directly involved in helping to decarbonise the world.

But for investors keen on environmental, social and governance (ESG) issues, there are a few. And the top ones have delivered some outsized gains over the past year.

The ASX 200 share ‘at the sweet spot of decarbonisation’

One ASX 200 share with exposure to the global decarbonisation push with the potential to become a future decarbonisation leader is Lynas Rare Earths Ltd (ASX: LYC).

That’s according to Stephane Andre, principal of Alphinity Investment Management.

“In Australia, for the moment, most of the opportunities are really happening on the whole metals and mining side, where basically you have the extraction of the minerals, which facilitate EVs, batteries and so on,” Andre told Livewire.

Narrowing that down to a specific ASX 200 share, Andre continued:

Lynas is the one I’m proposing, which is a buy for me. It is really at the sweet spot of decarbonisation and geopolitical diversification. So when you think about decarbonisation, rare earth is really critical for wind turbines, electric vehicles and so on.

In terms of the geographical side, most rare earths, around 80%, are produced and treated in China. Lynas is the only large manufacturer or producer of rare earths outside of China. And that has value geopolitically from a more geographic diversification perspective.

Andre said Alphinity liked the ASX 200 share firstly “in terms of the outlook on rare earth, we think that the price is going to stay higher for longer. Demand is very, very strong here.”

Alphinity is also bullish on the outlook for Lynas Rare Earths production.

According to Andre:

Production-wise, we think that actually, Lynas will come out with some surprise announcements of how they can really beef up the production volume that they will be aiming for in the next five years.

How has Lynas been performing?

Lynas offers a good example of how ESG investors looking for ASX 200 shares don’t need to sacrifice returns for ethics.

While the Lynas share price has come under pressure in recent months, shares remain up 61% since this time last year. By comparison the ASX 200 has gained 4% over the 12 months.

At the current share price, Lynas has a market cap of some $8.3 billion.

The post The ASX 200 share ‘at the sweet spot of decarbonisation’: expert appeared first on The Motley Fool Australia.

More reading

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• What’s going on with the Lynas share price today?
• ASX 200 midday update: AMP asset sale talks, Syrah rockets
• Why Adbri, Eroad, Lynas, and Perpetual shares are tumbling
• Should you buy Iluka or Lynas shares for rare earths exposure?

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 Argosy Minerals Limited (ASX: AGY) share price is falling today. This comes as the lithium miner provided an operational update on the Rincon Lithium Project.

The company holds a 77.5% interest in the Rincon Project, located in Salta Province, Argentina. The mine is situated within the so-called ‘lithium triangle’ – the world’s dominant lithium production source.

At the time of writing, Argosy shares are fetching 43.5 cents apiece, down 4.4%.

It’s worth noting that negative sentiment across the All Ordinaires (ASX: XAO) has affected the company’s shares. The Index is currently 1.81% lower

How is the Rincon Lithium Project progressing?

In its announcement, Argosy advised that 71% of the total construction works have been completed to bring the Rincon Project online.

The development of the modular 2,000 tonnes per annum of lithium carbonate production is currently on schedule and budget.

The company is aiming to achieve the first commercial production of lithium carbonate product from the next quarter.

Argosy noted that major works consist of the design phase, site construction, and plant commission works. As such, Argosy provided a snapshot of the current progress:

• The design phase works (including engineering layout) is 100% complete;
• The construction phase works is 74% complete;
• Plant commissioning works (comprising raw materials acquisition and workforce/team development) is 13% complete.

Major construction works such as building the process plant, equipment and associated installations, and expansion of the brine system have all advanced. Here’s a further view of where each of the stages are at:

• 99% of earthworks/land movements completed;
• 94% of site works completed (site camp/accommodation, laboratory and office, and other works);
• 100% of the brine system completed (pumping station and plant settling ponds);
• 72% of the process plant completed (plant equipment acquisition and plant warehouse); and
• 64% of utilities and associated services (vapour system, communication system and ancillary services).

Argosy hopes to expand the 2,000tpa of lithium carbonate to a 12,000tpa project development.

It believes that with lithium prices rising along with tightening market supply and demand conditions, potential off-take arrangements will become more attractive. This could have a profound impact on the Argosy share price in the near-term future.

Management commentary

Argosy managing director Jerko Zuvela touched on the company’s latest developments, saying:

The company’s Puna operations team continues with construction and development works progress at our Rincon Lithium Project, as we move closer to commencing the 2,000tpa lithium carbonate production operations.

The lithium market remains very positive and lithium carbonate prices may allow very lucrative product sales revenues. This is providing strong and additional interest from major groups in our project and especially our product, noting our Rincon Lithium Project will become the next commercial scale operation. Argosy’s transformation into a cashflow generator is nearing, whilst also progressing toward the next stage 12,000tpa scale operations.

About the Argosy share price

In the last 12 months, the Argosy share price has gained around 367%, with year to date up 36%.

On valuation grounds, Argosy has a market capitalisation of roughly $589 million, with 1.35 billion shares on issue.

The post Argosy share price backtracks despite ‘progress’ at Rincon appeared first on The Motley Fool Australia.

More reading

• Here’s why the Global Lithium share price is soaring 7% today
• 2 ASX dividend shares analysts have named as buys for income investors
• Up 80% in 2022, are Coronado shares heading for the ASX 200?
• Core Lithium share price slips despite positive news
• ASX 200 midday update: NAB’s AUSTRAC update, AGL downgrades guidance, Qantas takes off

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 Global Lithium Resources Ltd (ASX: GL1) share price is on a tear today, up 7.4% in morning trade.

Shares in the ASX lithium explorer are shunning the wider market sell-off today following positive assay results.

Let’s look at the highlights.

What results did Global Lithium report?

The Global Lithium share price is surging after the company reported it has received the highest-grade lithium assays to date at its 100%-owned Marble Bar Lithium Project, located in Western Australia.

The results from recent drilling campaigns at the project included:

• 3 metres at 2.5% Li2O and 32 parts per million Ta2O5 from 67 metres, including 1m @ 4.1% Li2O
• 4m @ 1.55% Li2O and 69ppm Ta2O5 from 37m
• 4m @ 2.18% Li2O and 33ppm Ta2O5 from 13m

Additionally, the explorer said the potential for lithium was demonstrated in the east of the project where several drill holes intercepted wide zones of lithium mineralisation.

Global Lithium head of geology Stuart Peterson commented on the results:

Our Q4 2021/Q1 2022 exploration drilling program continues to build momentum at the MBLP, with lithium intercepts continuing along the 6-kilometre strike of the mineralisation already identified within the project area.

These results continue to highlight the prospectivity of the area, particularly towards the southern and eastern areas of GL1’s tenement package. The successful program vindicates the targeting effort by the Global Lithium and CSA Global teams and provides a strong platform for future growth from the ongoing exploration.

Further, the company said that both existing and recently identified lithium targets have yet to be tested. These will remain the focus of its drilling campaign, which kicked off in February, for the remainder of the year.

“The lithium market remains very strong and we expect this momentum to continue throughout 2022 and beyond,” Peterson added.

Global Lithium share price snapshot

The Global Lithium share price has gained an eye-popping 678% over the past 12 months. For perspective, the All Ordinaries Index (ASX: XAO) is up 4% over the past full year.

The post Here’s why the Global Lithium share price is soaring 7% today appeared first on The Motley Fool Australia.

More reading

• ASX lithium shares set to deliver next positive surprise to investors

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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Are you looking for some dividend options for your portfolio? If you are, check out the two ASX shares listed below.

Here’s what analysts are saying about these ASX dividend shares:

HomeCo Daily Needs REIT (ASX: HDN)

The first ASX dividend share that could be a buy is the HomeCo Daily Needs REIT.

It is a property company focused on neighbourhood retail, large format retail, and health and services assets.

The team at Goldman Sachs is very positive on the company and sees it as well-placed to benefit from consumer trends.

The broker commented: “We believe HDN is undervalued at its current valuation given its diversified tenant base, and see it as well positioned to benefit from the shift to omni channel retailing, with additional external growth opportunities to drive earnings growth over the medium-term.”

Goldman has a buy rating and $1.70 price target on its shares. It is also forecasting dividends per share of 8 cents in FY 2022 and 9 cents in FY 2023. Based on the current HomeCo Daily Needs share price of $1.43, this will mean dividend yields of 5.6% and 6.3%, respectively.

Transurban Group (ASX: TCL)

Another ASX dividend share that has been tipped as a buy is Transurban.

It is one of world’s leading toll road operators with a portfolio of key roads in Australia and North America.

Analysts at Morgans believe it could be a good option for investors. Particularly given the positive outlook for dividend increases in the coming years thanks to favourable trends and the normalisation of trading conditions post-COVID. Morgans has an add rating and $14.42 price target.

It said: “We view TCL as a high quality pure-play toll road infrastructure portfolio benefitting from employment and population growth, urbanisation, and the value of time, with particular exposure to the east coast capital cities in Australia.”

As for dividends, the broker is forecasting dividends per share of 37 cents in FY 2022 and then 60 cents in FY 2023. Based on the current Transurban share price of $14.34, this implies yields of 2.6% and 4.2%, respectively.

The post 2 ASX dividend shares analysts have named as buys for income investors appeared first on The Motley Fool Australia.

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The Coronado Global Resources Inc (ASX: CRN) share price has been an outstanding ASX performer in 2022 so far. Coronado shares are currently up 0.22% so far today, putting this coal miner at a price of $2.315 share. It pushes Coronado shares up an eye-watering 78% or so in 2022 thus far. Not a bad return for four months.

Coronado’s stellar share price performance over the year to date has resulted in the company’s market capitalisation swelling to almost $3.9 billion. However, Coronado still isn’t part of the ASX’s flagship index, the S&P/ASX 200 Index (ASX: XJO).

The ASX 200 is designed to reflect the 200 or so largest shares by market cap on the Australian share market. Coronado’s market cap is far larger than many of the ASX 200’s smaller components. But the company still hasn’t made the cut.

However, if reporting in The Australian this week is to be believed, that could be about to change. According to the report, broker Wilsons is tipping five new entrants to the ASX 200 when the index is due for its quarterly rebalance next month.

Coronado share price set for an ASX 200 promotion

And Coronado is one. Since AMP Ltd (ASX: AMP) is no longer considering spinning off its Collimate assets, Wilsons reckons Coronado is the most likely beneficiary. Here’s some of what Wilsons had to say on the matter:

Coronado is the least liquid of the probable entrants, which should be price-supportive for Coronado on the day of the rebalance… Its chances of inclusion improved upon AMP’s announcement, which will likely drive short-term trading support in the coming days.

In addition to Coronado, Wilsons is predicting that Core Lithium Ltd (ASX: CXO), Johns Lyng Group Ltd (ASX: JLG), Brainchip Holdings Ltd (ASX: BRN), and Coronado’s fellow coal share New Cope Corporation Limited (ASX: NHC) are likely candidates for ASX 200 inclusion.

These shares are likely to take the place of companies like Codan Limited (ASX: CDA), Polynovo Ltd (ASX: PNV), Appen Ltd (ASX: APX), and Platinum Asset Management Ltd (ASX: PTM). These are the unlucky shares that Wilsons has identified as the most likely to get kicked out of the index next month.

We’ll find out what the ‘new ASX 200’ looks like next month on 3 June. So it will be interesting to see if Coronado makes the cut, as this ASX broker is predicting.

The post Up 80% in 2022, are Coronado shares heading for the ASX 200? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: NAB’s AUSTRAC update, AGL downgrades guidance, Qantas takes off
• Why did the Wesfarmers share price lag the ASX 200 in April?
• Why did the Bank of Queensland share price tank 7% in April?
• These were the best performing ASX 200 shares in April
• Direct indexing: What is this latest investing fad?

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 positions in and has recommended Appen Ltd and POLYNOVO FPO. 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 Core Lithium Ltd (ASX: CXO) share price is sliding this morning despite the company announcing a positive update.

At the time of writing, the lithium producer’s shares are swapping hands at $1.33, down 5%.

It’s possible the dip may be part of a broader fall across the All Ordinaries Index (ASX: XAO), which is trading 1.6% lower at 7,601 points at the time of writing. This follows a disappointing finish on Wall Street on Friday, with all major indices deep in the red.

Let’s take a closer look at what Core Lithium released to the ASX.

Core Lithium progresses on Finniss Lithium Project

In today’s release, Core Lithium announced a crushing services contract with CSI Mining Services (CSI) for the Finniss Lithium Project.

Based in Western Australia, CSI is a wholly-owned subsidiary of mining services giant Mineral Resources Ltd (ASX: MIN).

Core Lithium said the process would involve feeding the stockpiled run of mine ore into the CSI crusher circuit. The crushed ore would then be “stockpiled before being processed by the dense media separation plant to make spodumene concentrate for export”.

While crusher civil works are nearing completion, the company expects plant and equipment to be mobilised to the site next month.

Core Lithium is building Australia’s most advanced lithium project, with the first production of lithium concentrate scheduled in Q4 2022.

Once online, the Finniss Lithium Project will be the first Australian lithium-producing mine outside Western Australia.

Core Lithium managing director Stephen Biggins commented:

The award of the crushing contract is another significant step in the development of the Finniss Lithium Project. Core staff have done a great job getting the site ready for CSI to start work next month.

Regardless of the positive news, the Core Lithium share price has come under selling pressure today.

About the Core Lithium share price

In the past year, Core Lithium has surged close to 400% and is up around 130% year to date.

The company’s share price reached an all-time high of $1.675 earlier this month before taking a breather.

Based on valuation grounds, Core Lithium has a market capitalisation of roughly $2.33 million.

The post Core Lithium share price slips despite positive news appeared first on The Motley Fool Australia.

More reading

• Core Lithium share price charges higher amid quarterly update
• Why is it such a mixed day of trade for ASX lithium stocks?
• The Core Lithium share price is sinking 6% today. Why?
• What are the 10 biggest ASX shares in the lithium space
• Here are the top 10 ASX shares 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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At lunch on Monday, the S&P/ASX 200 Index (ASX: XJO) has followed Wall Street’s lead and sunk deep into the red. The benchmark index is currently down 1.65% to 7,312.9 points.

Here’s what is happening on the ASX 200 today:

NAB’s AUSTRAC update

The National Australia Bank Ltd (ASX: NAB) share price is trading lower today after the banking giant released an update on its dealings with AUSTRAC. According to the release, the bank has entered into an Enforceable Undertaking with the government financial intelligence agency following an enforcement investigation in relation to NAB’s compliance with Australia’s anti-money laundering and counter-terrorism financing laws.

AGL downgrades earnings guidance

The AGL Energy Limited (ASX: AGL) share price has come under pressure today after the energy company downgraded its earnings guidance. Due to the previously reported generator fault at Unit 2 of the Loy Yang A Power Station in Victoria in April, AGL now expects its underlying EBITDA to be between $1,230 million and $1,300 million. This is down from its previous guidance range of between $1,275 million and $1,400 million.

Qantas trading update

The Qantas Airways Ltd (ASX: QAN) share price is defying the market selloff and is taking off on Monday. Investors have been buying the airline operator’s shares after a trading update revealed that domestic travel numbers are rebounding faster than expected. This is expected to underpin second half underlying EBITDA of $450–$550 million, which is a big improvement on its first half EBITDA loss of $245 million.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Monday has been the Qantas share price with a 2.5% gain. Going the other way, the worst performer has been the Pro Medicus Limited (ASX: PME) share price with an 8% decline. This follows a selloff in the tech sector, which is hitting high PE stocks particularly hard.

The post ASX 200 midday update: NAB’s AUSTRAC update, AGL downgrades guidance, Qantas takes off appeared first on The Motley Fool Australia.

More reading

• Why did the Wesfarmers share price lag the ASX 200 in April?
• Qantas share price lifts off on projected return to profitability
• Why did the Bank of Queensland share price tank 7% in April?
• These were the best performing ASX 200 shares in April
• NAB share price drops amid AUSTRAC update

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 Pro Medicus Ltd. The Motley Fool Australia has positions in and has recommended Pro Medicus Ltd. 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 underperformed the S&P/ASX 200 Index (ASX: XJO) in April 2022.

From the closing bell on 31 March to the end of April, the Wesfarmers share price fell 1.98%. That compares to the ASX 200, which fell 0.86%. This isn’t much of an underperformance, but it’s still more than double the loss of the ASX 200.

What happened during April?

Wesfarmers didn’t announce any market-sensitive news during the month.

However, on the last day of March 2022, the ASX 200 share did announce the completion of the Australian Pharmaceutical Industries acquisition. Wesfarmers paid $1.50 per share to API shareholders. It said that the initial capital was $1.025 billion, with $774 million being paid to API shareholders plus the estimated funding requirement for API’s net debt and the working capital balance.

Wesfarmers says that API will be the foundation business of a new health division. It’s going to develop capabilities and invest in the growing health, wellbeing and beauty sector. Management see opportunities to strengthen the competitive position of API and its partners, by expanding product ranges, improving supply chain capabilities, and improving the online experience for customers.

What could happen next for the Wesfarmers share price?

There has been a lot of talk about inflation and rising interest rates this year.

In terms of managing inflation, Wesfarmers said that it “continues to actively manage increasing inflationary pressure and will leverage its scale to mitigate the impact of rising costs. The group’s retail businesses will increase their focus on price leadership and are well positioned to continue to provide customers with great value on everyday products as rising cost-of-living pressures impact household budgets.”

Time will tell what this means for the Wesfarmers retail profit margin and how much extra product volume it sells.

COVID-19 continues to have an impact. The company said it is incurring additional costs and experiencing “stock availability impacts” as a result of ongoing global supply chain disruptions, elevated team member “absenteeism”, and delays with third-party logistics providers.

Supply chain disruptions, higher transport costs and constraints in domestic labour markets are expected to continue in the second half.

Retail trading conditions were “subdued” in January, which Wesfarmers put down to rising cases of Omicron, impacting both customer traffic and labour availability. However, it said that trading momentum was improving in February 2022.

What next for the Wesfarmers share price?

One recent rating comes from Citi, with a price target of $50. That implies the Wesfarmers share price will barely move over the next year.

Citi thinks that Wesfarmers could be a beneficiary of government stimulus to help the population.

The broker is neutral on the business. According to Citi’s estimates, the Wesfarmers share price is valued at 24x FY22’s estimated earnings and 22x FY23’s estimated earnings.

Citi thinks Wesfarmers will pay a grossed-up dividend yield of 5.4% in FY22 and 5.8% in FY23.

The post Why did the Wesfarmers share price lag the ASX 200 in April? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: NAB’s AUSTRAC update, AGL downgrades guidance, Qantas takes off
• Why did the Bank of Queensland share price tank 7% in April?
• These were the best performing ASX 200 shares in April
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Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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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