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Tesla Inc (NASDAQ: TSLA) shares moved lower again last night, taking their fall to 23% in the past 25 days.

The downtrend has persisted while Tesla co-founder Elon Musk has proceeded with his intentions to take over Twitter Inc (NYSE: TWTR). Adding fuel to fire, Musk sold down A$5.6 billion worth of Tesla shares across Wednesday and Thursday.

Buying a big birdy doesn’t come cheap

The board of social networking company Twitter agreed to a sizeable A$61.7 billion offer earlier in the week made by Elon Musk. Now, with the ink still wet, Musk is making sure he has the funds to make good on the deal.

According to filings made with the SEC, the avid Twitter user has disposed of around 4.4 million shares in Tesla this week. In the process, Musk has raised A$5.6 billion in cash that will likely be contributed to the US$21 billion cash component of the acquisition.

Tesla shareholders have shown some anxiousness in light of the deal. In addition to the share sales, another US$12.5 billion will be made available by investment banks through loans backed by Tesla shares.

In contrast, the news has brought plentiful gains to Twitter shareholders in the past month. During this time, the company’s shares have climbed 20.7% to its current US$49.11 level.

Will Twitter cause more Tesla shares to be sold?

Shortly after the Tesla filings were posted, Musk replied to a tweet that relayed the co-founder’s selling spree.

No further TSLA sales planned after today

— Elon Musk (@elonmusk) April 29, 2022

https://platform.twitter.com/widgets.js

It appears further sales are not on Elon’s radar. Although, the more prevalent concern has been around the possibility of Musk being ‘margin called’ if the Tesla share price were to fall significantly. This would occur if the value of the shares being used to secure a loan to acquire Twitter became worth notably less than the initially loaned amount.

At present, Tesla shares are trading at US$877.51 apiece — 30% above where they were a year ago.

The post Elon Musk just sold $5.6 billion of Tesla shares. What’s the deal? appeared first on The Motley Fool Australia.

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• Elon Musk is buying Twitter. Is it time to sell?
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• Elon Musk buys Twitter in $60 billion mega deal

Motley Fool contributor Mitchell Lawler has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla and Twitter. 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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Shares of QBE Insurance Group Ltd (ASX: QBE) are tracking higher on Friday and now rest in the green.

They initially spiked from the open, however, have since taken a backward step from intraday highs of $12.41.

At the time of writing, investors are paying $12.32 apiece for QBE shares.

Is the QBE share price at a tipping point?

After a difficult period these past few years, the QBE share price has managed to reverse course in 2022 and trade 9% higher.

Meanwhile, over the past month of trade, QBE has jumped 8% and has managed to book a 26% gain during the last 12 months.

Perhaps it’s these returns that have sophisticated investors more constructive on the insurance giant, backed by its underlying fundamentals.

That could be the case, according to hedge fund manger Mark Landau, chief investment officer (CIO) of L1 Capital.

Sure, its share price has faltered in recent years, but the devil’s in the detail with QBE, Landau says.

“If you look in detail at the last result of QBE’s profits, if you take away all the actuarial assumptions that effectively lower their profit, their profit was actually 40% better than what they told the market,” he recently told Livewire.

Even though investors “hate the stock”, there are a number of catalysts feeding into QBE’s operating story right now.

One of those factors is the amount of short-dated bonds QBE holds on its books, Livewire says, noting that for “every 1% increase in bond yields, the insurer gets a roughly 20% increase in profits”.

Landau says that no one expects QBE to deliver higher profits, “let alone 20% [profit] on top of the underlying insurance business”.

On this backdrop, the CIO submits that investors who are overlooking QBE right now could be missing an inflection point “similar to what we had in 2001”.

Analysts are positive about the QBE share price too, touching on similar points to Landau in their recent assessment of the company.

In particular, each of UBS and JP Morgan rate QBE as a buy, valuing it at $15 and $15.50 per share respectively.

The post Expert says investors are ‘missing this inflection point’ for QBE shares appeared first on The Motley Fool Australia.

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• The QBE share price has gained 16% in a month. Is it still a ‘relatively inexpensive’ ASX 200 share?
• Broker names 3 of the best ASX 200 shares to buy in April

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

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The Woolworths Group Ltd (ASX: WOW) share price will be one to watch closely next week.

This is because the retail giant is scheduled to release its third quarter sales up on Tuesday 3 May.

What is the market expecting from Woolworths?

According to a note out of Goldman Sachs, it analysts are expecting Woolworths to deliver a stronger third quarter update than what rival Coles Group Ltd (ASX: COL) reported earlier this week.

In case you missed it, for the 12 weeks ended 27 March, Coles reported sales growth of 3.9% over the prior corresponding period to $9.3 billion.

Goldman is expecting Woolworths to better this with group sales of $14.7 billion for the three months. This will be a year on year increase of 6.4%.

The broker explained: “We forecast 3Q22 group sales to be at A$14.7bn, up +6.4% yoy. We expect the Australian and New Zealand foods division to report +4% and +5.5% comparable growth respectively and for BigW to see -6% decline in comparable sales. We forecast e-commerce sales for Australian Foods segment to be at A$1.2bn, representing c. 10.2% of divisional sales.”

Is the Woolworths share price in the buy zone?

Goldman Sachs still sees value in the Woolworths share price at the current level.

The note reveals that its analysts have a buy rating and $40.50 price target on its shares currently.

Based on the current Woolworths share price of $38.57, this implies potential upside of 5% for investors over the next 12 months.

Furthermore, Goldman is expecting the company to pay fully franked dividends of 93 cents in FY 2022 and 111.4 cents in FY 2023. This represents yields of 2.4% and 2.9%, respectively.

The post Is the Woolworths share price in the buy zone ahead of next week’s Q3 update? appeared first on The Motley Fool Australia.

More reading

• Why is the Woolworths share price missing out on the ASX party today?
• 3 ASX companies that can raise prices whenever they want
• How is the Woolworths share price managing to defy today’s sell-off?
• Wow! Here’s how much $5,000 of Woolworths shares bought 5 years ago would be worth now
• Why has the Woolworths share price outperformed Wesfarmers so far in 2022?

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 COLESGROUP DEF SET. 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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APA Group (ASX: APA) is expected to increase its dividends in 2022. But how large is the dividend yield going to be?

APA is one of the largest infrastructure businesses on the ASX with a market capitalisation of $13.5 billion.

It has a number of different assets in the energy industry. It has more than 15,000km of natural gas pipelines which transport more than half of the nation’s natural gas usage. It also has assets across wind farms, solar farms, gas power stations, and gas storage.

At the time of writing, the APA share price is $11.47, up 0.044% today.

APA dividend expectations

APA funds its dividend from the cash flow that it generates each year.

In the FY22 half-year result, the business reported 4.3% revenue growth, 4.5% underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) growth, and free cash flow growth of 22.6%.

APA decided to increase its interim dividend by 4.2% to 25 cents per security. The business has increased its dividends every year for the past decade and a half.

Management has provided guidance for the annual FY22 distribution. It’s expected to be 53 cents per security, which would represent an increase of 3.9%.

How much would this be in yield terms? At the latest APA share price, the gas infrastructure business has a projected dividend yield of 4.6%.

How does APA keep growing its dividend?

APA is benefitting from two factors that are helping it grow its cash flow.

APA says that it is “favourably exposed to rising inflation with almost 100% of contracted revenues linked to inflation indices”.

Inflation is increasing around the world, including in Australia. The latest inflation release showed that for the 12 months to 31 March 2022, inflation was 5.1%.

Another way that APA can grow its cash flow is by expanding its asset base of energy investments. It can do this through acquisitions or by building them itself.

The organic growth pipeline is now worth more than $1.4 billion. Some examples of that include the East Coast grid expansion, which will increase winter peak capacity by up to 25% through a two-stage expansion for a capital investment of $270 million.

Another example is the Northern Goldfields interconnect, which is a new 580km pipeline that increases capacity to the Goldfields region, for a capital investment of about $460 million.

It’s also growing its investments in the renewable energy space. For example, the Mica Creek solar farm is an 88MW project with a capital investment of $150 million.

APA is also planning for the long term. It is looking at the potential for some of its pipelines to be used for hydrogen, or for gas to be blended with hydrogen.

How big could the dividend yield get in future years?

According to Commsec, APA is projected to have a dividend yield of 4.9% in FY23 and 5% in FY24 at the current APA share price.

The post How big is the APA dividend yield going to be in 2022? appeared first on The Motley Fool Australia.

More reading

• Own the Vanguard Australian Shares High Yield ETF? Here’s what you’re invested in
• 3 ASX companies that can raise prices whenever they want
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• 3 ASX 200 stocks smashing 52-week highs today
• The APA share price just powered to a 52-week high

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 APA Group. 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 S&P/ASX 200 Index (ASX: XJO) is enjoying a pleasant end to the week so far this Friday after the savage selloff we saw earlier in the week. At the time of writing, the ASX 200 is up 0.73% at just over 7,400 points. But the Webjet Limited (ASX: WEB) share price is flying far higher.

Webjet shares are presently up by a healthy 1.9% at $5.99 a share at the time of writing, more than double the gains of the broader market.

So why are Webjet shares taking off so convincingly today?

Why is the Webjet share price soaring today?

Well, it’s not entirely clear. There have been no announcements or developments from the company itself.

In saying that, there is a clear trend on the ASX boards today. Webjet shares are up convincingly. But so are the company’s peers in the ASX travel sector. Take Qantas Airways Limited (ASX: QAN). Qantas shares are currently up by 1.74%. Flight Centre Travel Group Ltd (ASX: FLT) shares are up by an eerily similar amount with a 1.68% rise. And Corporate Travel Management Ltd (ASX: CTD) has managed a 1.69% bump. 

This could be an extension of the trend we have seen with Webjet and other travel shares in recent weeks. With falling COVID case numbers in Australia, as well as the continued relaxation of travel restrictions around the world, investors seem to be warming to the future prospects of companies like Webjet, which are still recovering from the ravages of the pandemic.

Although, Webjet shares did suffer quite a bit earlier in the week in the midst of the market’s selloff, so we could just be seeing a bounce back from that negative sentiment. Even after today’s rise, Webjet shares remain down by almost 2% over the past five trading days.

Whatever the reason for the strength in the Webjet share price, as well as other ASX travel shares today, it will no doubt come as a welcome development for shareholders.

At the current Webjet share price, this ASX 200 travel share has a market capitalisation of $2.28 billion.

The post Why is the Webjet share price flying higher on Friday? appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 travel shares having a first-class end to the week?
• ASX 200 midday update: ResMed disappoints, PointsBet rockets higher
• Is rising inflation reducing how much Aussies are investing in ASX shares?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today

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 recommended Corporate Travel Management Limited, Flight Centre Travel Group Limited, and Webjet 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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It’s a good day on the market today, with ASX 200 travel shares among those leading the charge into the green.

At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has gained 0.69%. Nearly all of the index’s travel-focused constituents are outperforming.

Let’s take a look at what might be driving ASX 200 travel shares higher on Friday.

Why are ASX 200 travel shares taking off today?

The ASX travel sector appears to be ramping up on Friday, with many of its biggest names outperforming the broader market.

Leading the pack is the Flight Centre Travel Group Ltd (ASX: FLT) share price. It’s currently 2.7% higher than its previous close. Meanwhile, Qantas Airways Limited (ASX: QAN) is boasting a 1.8% share price improvement. Shares in Corporate Travel Management Limited (ASX: CTD) and Webjet Limited (ASX: WEB) have each gained 2.2%.

The gains may reflect improving ASX investor sentiment in the Australian travel industry. After all, major airports in Melbourne, Sydney, Adelaide, Brisbane, Perth, Cairns, and the Gold Coast reported their busiest period since the onset of the pandemic this month. At the same time, the Federal Government has lifted its ban on cruise ships.

Today’s gains may also have something to do with the strong overnight performance of international travel stocks. Shares in Booking Holdings Inc (NASDAQ: BKNG) and Airbnb Inc (NASDAQ: ABNB) recorded gains of 2.5% and 4.9% respectively. Airline stocks Delta Air Lines Inc (NYSE: DAL), Southwest Airlines Co (NYSE: LUV), American Airlines Group Ltd (NASDAQ: AAL), and Ryanair Holdings Plc (NASDAQ: RYAAY) also gained between 1.5% and 2.5% in Thursday’s session overseas.

The year so far…

Overall, 2022 has been a good year for ASX 200 travel shares so far. The Flight Centre share price has gained a whopping 21% since the start of the year. Shares in Qantas, Webjet, and Corporate Travel Management have gained 8%, 11%, and 14% respectively.

The post Why are ASX 200 travel shares having a first-class end to the week? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: ResMed disappoints, PointsBet rockets higher
• Is rising inflation reducing how much Aussies are investing in ASX shares?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares on Thursday

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 Airbnb, Inc. and Booking Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Delta Air Lines. The Motley Fool Australia has recommended Booking Holdings, Corporate Travel Management Limited, Flight Centre Travel Group Limited, and Webjet 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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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.

We’re in the heart of earnings season, with the mega-cap technology stocks all set to report first-quarter results this week. With trillions of dollars in market cap, these are the most important earnings results to determine the health of the U.S. economy and financial markets. Alphabet (NASDAQ: GOOG), the parent company of Google, YouTube, and Android, reported its Q1 earnings after the market closed on April 26. The report looked good, but investors decided to sell off the stock Wednesday because the company fell short on earnings per share and revenue estimates.

The stock is down about 2% since the report and down 7% in the last five trading days. After its post-earnings dump, Alphabet stock is down about 1.5% over the past 12 months.

Given the latest earnings report and the recent stock performance, is it a good time to buy shares?

Q1 results actually looked solid

For the first three months of 2022, Alphabet generated $68 billion in revenue, up 28% year over year. The company continues to show strong levels of profitability, with operating income of $20 billion, equating to an operating margin of 30%. Google Search is still the majority of Alphabet’s business, and contributed the most to its growth in Q1 of 2022, with revenue jumping from $31.9 billion a year ago to $39.6 billion this quarter. It also got solid contributions from Google Cloud, which grew revenue 44% year over year to $5.8 billion. 

Alphabet has phenomenal profit margins, but it is still investing like crazy to grow its business. For example, on the conference call management said it would be investing $9.5 billion in office space and data centers over the next year, and that the company has spent $40 billion on research and development (R&D) over the past two years. If Alphabet can get a return on these new employee hires and all this R&D spending, it will hopefully keep revenue growing at a double-digit rate for the foreseeable future.

Valuation and buybacks make for a great combination

Over the last 12 months, Alphabet has generated $69 billion in free cash flow. This comes while the company is making major capital investments (mentioned above) and it is burning approximately $1 billion a quarter each on Google Cloud and Other Bets. With a market cap of $1.5 trillion, the stock trades at a trailing price-to-free cash flow (P/FCF) of 21.7. This is lower than the average stock in the Nasdaq Composite Index and would be even lower if management decided to stop investing for growth in its Google Cloud and Other Bets.

Alphabet is also returning cash to shareholders through share repurchases. In Q1 alone, it spent $13.3 billion on share buybacks, and it has reduced its share count from around 690 million a few years ago to 660 million today. This helps remaining shareholders by increasing free cash flow per share. In conjunction with its Q1 results, Alphabet announced a new $70 billion share repurchase program, so investors should expect the share count to continue to fall over the next few years.

GOOG Shares Outstanding data by YCharts

So should you buy shares?

Investors are concerned about Alphabet’s stock right now for a few reasons. First, Other Bets continues to lose money at a rate of about $1 billion a quarter. And at Google Cloud, revenue continues to grow quickly but operating leverage is not yet showing up, with the division putting up a $931 million operating loss in Q1. On top of this, YouTube’s revenue growth slowed down to only 14% in Q1 because of competition from TikTok and a reduction in time spent on video with pandemic restrictions loosening.

But here’s the thing: The core Google business is so profitable it doesn’t matter if Google Cloud and Other Bets continue to lose money. At a P/FCF close to 20, a steady share repurchase program, and the core Google business growing at 10%-plus a year, Alphabet stock will be much higher five years from now, no matter what is happening in its other divisions. That makes the stock a buy right now on this post-earnings dip. 

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

The post Alphabet stock fell following Q1 report. Is it a buy? appeared first on The Motley Fool Australia.

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• Could Amazon help you become a millionaire by 2032?

Brett Schafer has no position in any of the stocks mentioned. Suzanne Frey, an executive at Alphabet, 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 Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). 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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ASX investors appear unenthused by the latest report from Pointerra Ltd (ASX: 3DP), with the company’s share price 2% in the red to trade at 24 cents.

The ASX tech company released its March quarter activities and cash flow report this morning. Pointerra described March as a “landmark quarter” in which the company concurrently scaled up its platform use among four major US utility providers, while also broadly growing its annual contract value (ACV).

The company offers 3D geospatial data technology which enables clients to view locations around the world in real-time 3D format from any internet device.

Pointerra share price dips despite 71% growth in receipts

Highlights during the three months to 31 March included:

• March quarter customer receipts of $2.4 million (71% year-on-year (YoY) growth vs. Q3 FY21)
• Year-to-date customer receipts of $6.2 million (138% YoY growth vs. FY21)
• Cash flow expenditure from operating activities of $2.3 million
• Consecutive cash flow positive quarter from operations at $64,000
• Cash flow expenditure from investing activities of $42,000
• Cash and cash equivalents balance of $4.9 million as of 31 March

What happened in the March quarter for Pointerra?

The company continued to enhance its platform “in response to customer requests and in line with the Company’s strategic product roadmap”. The report highlighted a variety of improvements to the Pointerra3D Core, Pointerra3D Analytics, and Pointerra3D Answers segments of the platform.

Pointerra said the business is self-funding its organic growth. It said its analytics and answers segments, in particular, are “driving growth in ACV spend”.

New customers have been added and existing customers across all six of Pointerra’s target sectors — survey and mapping; AEC; utilities; transport; mining, oil and gas; and defence and intelligence — are increasing their ACV spend.

Pointerra reported a US$1.9 million increase in ACV in a separate enterprise sales and ACV update today. As at 29 April, ACV totals $US16.3 million, up from $US14.4 million as at 31 January.

What did management say?

According to the report:

The quarter was highlighted by step-change adoption in the scale of Pointerra3D platform deployment by US utility customers FPL, PG&E, Entergy & Eversource and reflects the continued development and adoption of the higher-value elements of the Pointerra3D solution portfolio — Analytics and Answers.

In relation to growing ACV, Pointerra said:

The Utility sector remains Pointerra’s largest single contributor to ACV and whilst the US continues to dominate geographically, the quarter saw successful paid POC’s delivered for Australian customers, which the Company expects to lead to new enterprise contracts in coming quarters, with new prospective clients in the United Kingdom and Europe also entering the sales pipeline during the quarter.

What’s next for Pointerra?

Pointerra said it plans to accelerate the company’s global expansion through the following initiatives:

• Opening its first US office to provide a regional home for the business
• Commencing operations in the UK to service the Europe, Middle East, and Africa (EMEA) region
• Pursuing strategic M&A tuck-in acquisitions targeted to add domain knowledge in people and product in the AEC; transport; and mining, oil, and gas sectors

The Pointerra share price is down 40% year-to-date. ASX tech shares have had a rough year in 2022 so far with the broader S&P/ASX All Technology Index (ASX: XTX) down 24%. By comparison, the S&P/ASX All Ordinaries Index is down 2.8% over the same period.

The post Pointerra share price in the red despite ‘landmark quarter’ appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 travel shares having a first-class end to the week?
• Alphabet stock fell following Q1 report. Is it a buy?
• This ASX energy share has rocketed 200% in 3 days on a secret Santos deal
• Fortescue share price lower after bearish broker note warns of dividend cuts
• Novonix share price powers up on strong quarterly revenue growth

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 positions in and has recommended Pointerra Limited. The Motley Fool Australia has recommended Pointerra 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 Hydrocarbon Dynamics Ltd (ASX: HCD) share price is rocketing again today, leaving the All Ordinaries (ASX: XAO) for dust.

At the time of writing, the energy company’s shares are up 52.63% to 2.9 cents. This means its shares have accelerated by more than 200% this week.

In contrast, the broader index is 0.84% higher to 7,706.6 points for the day.

What’s the deal with Hydrocarbon Dynamics?

Investors are rallying up the Hydrocarbon Dynamics share price to a 52-week high after digesting the company’s latest update.

According to its release, Hydrocarbon Dynamics advised it has been awarded the chemical treatment business for 30 wells with receipt of a follow-up order from Santos Ltd (ASX: STO).

The order follows a successful trial conducted on 3 wells in the Cooper Basin last year.

Hydrocarbon Dynamics stated that it will supplant one of the world’s largest oilfield chemical companies that previously treated these wells.

The initial order is expected to generate revenue of approximately A$140,000 with treatment expected to recommence next month.

Notably, Hydrocarbon Dynamics concluded a successful 6-month trial for the producer on a waxy field in the Cooper Basin. This achieved the “key objective of mitigating down time and production loss issues stemming from paraffin build-up.”

The company highlighted that the use of its HCD multi-flow reduced lost production by 96% in the trial.

Furthermore, the results demonstrated that with the introduction of HCD multi-flow there was exceptional improvements in well performance, cleaner flow lines and no additional build-up of sludge in the tanks.

Management said that it’s connecting with other producers in the region with similar production issues to expand business opportunities.

Hydrocarbon Dynamics share price snapshot

Adding to this week’s euphoric gains, the Hydrocarbon Dynamics share price has risen by more than 120% in 2022.

However, when looking further back, the company’s shares are up 45% over the last 12 months.

On valuation grounds, Hydrocarbon Dynamics commands a market capitalisation of around $17.02 million.

The post This ASX energy share has rocketed 200% in 3 days on a secret Santos deal appeared first on The Motley Fool Australia.

More reading

• Fortescue share price lower after bearish broker note warns of dividend cuts
• Novonix share price powers up on strong quarterly revenue growth
• Here’s why ASX 200 tech shares are having such a stellar end to the week
• ANZ share price higher on half year notable items update
• Ampol share price lifts amid electrifying new EV charging plans

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 Fortescue Metals Group Limited (ASX: FMG) share price is trading lower on Friday.

In afternoon trade, the mining giant’s shares are down 0.5% to $21.55.

Why is the Fortescue share price dropping?

Today’s weakness in the Fortescue share price could have been driven by a negative response to the miner’s quarterly update from a number of brokers.

This morning Credit Suisse, Goldman Sachs, and Morgan Stanley have all retained the equivalent of sell ratings on the company’s shares with price targets implying meaningful downside risk.

For example, the note out of Goldman Sachs reveals that its analysts have trimmed their price target to $14.90.

Based on the current Fortescue share price, this implies potential downside of 31% for investors over the next 12 months.

What did the broker say?

Goldman acknowledges that Fortescue’s shipments of 46.5Mt were well-ahead of its estimate of 43Mt. It also notes that the company’s price realisations were a touch ahead of its expectations and believes further improvements are coming in the current quarter.

However, this isn’t enough for a more positive view on the Fortescue share price.

This is due to a number of concerns relating to its valuation, the Fortescue Future Industries (FFI) business, and ramp-up risks with the Iron Bridge project.

In respect to its valuation, Goldman highlights that Rio Tinto Limited (ASX: RIO) shares are trading at 0.9x net asset value (NAV), whereas Fortescue’s shares trade at a lofty 1.7x NAV.

As for the FFI business, the broker has warned that its decarbonisation plans could come with significant costs and impact future dividend payments.

Goldman explained: “We think decarbonising the Pilbara could cost FMG over US$7bn (spend not in our numbers) and requires +US$50/t carbon or a iron ore green premia to be NPV positive. We think FMG is at an inflection point on capital allocation, and to fund the ambitious new strategy, we assume the dividend payout ratio falls from the current 80% to 50% from 2022 onwards.”

In light of this, the broker is forecasting dividend yields of 5% in FY 2023, 3% in FY 2024, and then just 2% in FY 2025.

This could mean the days of bumper yields will soon be coming to an end.

The post Fortescue share price lower after bearish broker note warns of dividend cuts appeared first on The Motley Fool Australia.

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

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