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The Myer Holdings Ltd (ASX: MYR) share price is on fire on Thursday morning.

In morning trade, the department store operator’s shares are up 21% to 49.5 cents after investors responded positively to its half year results release.

Myer share price jumps amid solid growth and dividend return

• Total sales growth of 8.5% to $1,517.4 million
• Comparable store sales growth of 17.8%
• Online sales growth of 47.5% to $424.1 million, now representing 27.9% of total sales
• Operating gross profit growth of 7.8% to $582.2 million
• Net profit after tax up 55.2% to $32.3 million (excluding JobKeeper)
• Statutory net profit after tax down 24.9% to $32.3 million
• First dividend declared since FY 2017 with fully franked 1.5 cents per share interim dividend
• Net cash up $16 million to $217 million

What happened during the first half?

For the six months ended 29 January, Myer delivered an 8.5% increase in sales to $1,517.4 million. This was driven by strong growth from its online business, which reported a 47.5% increase in sales to $424.1 million. This side of the business now accounts for approximately 28% of total sales.

Things were even better on the bottom line if you exclude the JobKeeper payments the company received in the prior corresponding period. Excluding these payments, Myer’s net profit after tax rose 55.2% to $32.3 million.

In light of this and its improving cash position, Myer has elected to pay its first dividend since FY 2017. It will be paying shareholders a fully franked 1.5 cents per share interim dividend.

Management commentary

Myer’s CEO, John King, said: “The half year results we have announced today demonstrate the strength and resilience of the business providing continued momentum for future growth.”

“The combination of our online platform and store network performed well in navigating the challenges faced during the period including disruptions caused by government-mandated lockdowns to mid-October, the emergence of Omicron in late December, and the mitigation of major supply chain disruption and staffing availability in early 2022.”

“Myer will pay a dividend for the first time in four years, demonstrating our confidence in the momentum being built as we move into the second half, with a return to sales growth in the first five weeks of second half with trade up 15.2% and a strong platform of future initiatives that are yet to be delivered as part of the Customer First Plan,” he added.

Trading update

Also potentially giving the Myer share price a boost today is the company’s update on trading so far in the second half.

It advised that during the first five trading weeks of the second half, it has seen a strong return to growth in stores and online. Myer sales are up 15.2%, with store sales up 9.3% and online up 48.6%.

Mr King said: “Despite the initial impact of Omicron in early January, we have returned to a growth trajectory – delivering 15.2% sales growth in the first five weeks of trade in the second half across both stores and online.”

The post Myer (ASX:MYR) share price up 21% amid strong half year result and first dividend since FY17 appeared first on The Motley Fool Australia.

More reading

• Here’s why the Newcrest (ASX:NCM) share price is in the red today
• 5 human urges that stop you from making money
• Is the QBE (ASX:QBE) share price a bargain after falling 19% in a month?
• Why did the Flight Centre (ASX:FLT) share price have such a volatile time in 2022?
• The Bank of Queensland (ASX:BOQ) share price has lost half its value in 15 years. How is the bank’s turnaround strategy going?

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 Bruce Jackson.

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The Newcrest Mining Ltd (ASX: NCM) share price is down 3.7% in early trade.

Newcrest closed yesterday at $28.20 and is currently trading for $27.16.

Shares look to be coming under pressure amid a fall in gold prices, with bullion down 2.5% overnight. That’s seen the S&P/ASX All Ordinaries Gold Index (ASX: XGD) open down 3.3% today.

Below we take a look at how the S&P/ASX 200 Index (ASX: XJO) gold miner’s Canadian acquisition is progressing.

What’s the latest on the ASX 200 gold miner’s acquisition?

The Newcrest share price is dipping despite the miner reporting it has completed its acquisition of Pretium Resources Inc, known as Pretivm.

Following the transaction, Pretivm will be delisted from the New York Stock Exchange and Toronto Stock Exchange.

Via the acquisition, Newcrest gains ownership of Pretivm’s Brucejack mine, located in British Columbia, Canada. According to the release, Brucejack counts amongst the highest-grade operating gold mines in the world.

Newcrest expects Brucejack will result in an immediate increase in its gold production and cash flows, quoting expected synergy benefits of some US$12 to $16 million annually. The Canadian asset is forecast to produce 95–115 thousand ounces of gold during Newcrest’s ownership in the 2022 financial year.

Commenting on the acquisition, Newcrest’s CEO, Sandeep Biswas said:

Through this acquisition and the continued development of our outstanding organic growth pipeline, Newcrest’s base case gold production is expected to remain strong until at least 2030, and we have a range of further upside opportunities being progressed across the portfolio. This production profile is also expected to drive a major reduction in All-In Sustaining Costs, which makes Newcrest unique in the industry.

Moving forward, Biswas added, “Our exploration team will be progressing an extensive drilling campaign across the Brucejack mineral claims which make up one of the largest epithermal footprints we have ever seen. The land package is largely unexplored and very early in its life…”

Newcrest share price snapshot

On the back of soaring gold prices (which retreated 2.5% overnight), the Newcrest share price has gained 19% over the past month. By comparison, the ASX 200 is down 3% in that period.

Year-to-date Newcrest shares are up 13%.

The post Here’s why the Newcrest (ASX:NCM) share price is in the red today appeared first on The Motley Fool Australia.

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• Why Infomedia, Newcrest, Piedmont Lithium, and Woolworths shares are rising today

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 Bruce Jackson.

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Investing is not easy. Otherwise everyone would do it and be rich already.

The fact is that optimal investing always requires completely rational decision making. Unfortunately, humans are terrible at being completely rational.

Emotions, even for the calmest individuals, take over subconsciously. 

So imagine that. Not only is investing hard, you have to constantly fight yourself to make the right calls.

You consistently lose against the index

This human tendency to act emotionally is seen in the statistics.

According to research firm Dalbar, the average investor consistently earns less-than-average returns.

“Dalbar found that for the 20 years ending December 31, 2019, the S&P 500 Index (SP: .INX) averaged 6.06%pa. The average equity fund investor earned a market return of only 4.25%pa,” stated a BetaShares blog post.

Even during 2020, when we saw a spectacular stock market bounce-back after a COVID-19 correction, the average investor earned 17.3% versus the S&P 500’s 18.4%.

And the gap was horrifying in the first half of 2021, when the average investor reaped 13.14% while the index went up by 15.25%.

So, as retail investors, how do we combat this?

The first step is to recognise how emotions compel us to make wrong decisions.

“While almost everyone is susceptible to the influence of emotional factors, it is important to raise these influences from the unconscious to the conscious,” stated BetaShares. 

“Educate yourself on the biases that investors are commonly prone to, and ask yourself whether your decisions are being influenced by them.”

Here are 5 behavioural biases that BetaShares warned investors to watch for:

Cognitive dissonance

When new information disagrees with existing knowledge, it’s emotionally jarring. To regain their comfort, people may form “obscure rationalisations”.

“As a result, we may often focus on the positives of the selection we have already made and ignore the downsides implied by the new information,” stated the BetaShare blog.

“From an investment perspective it means we may be overly focused on a stock or an ETF’s upside whilst ignoring the risks.”

The remedy to this bias is to treat information that challenges your existing beliefs with as much respect as views that agree with your ideas.

Confirmation bias

This is when an observation confirms our existing beliefs, thereby increasing our conviction, to the exclusion of other possibilities.

For example, if you have a preconceived idea that brown-haired people catch a cold more often than others, every time you see a brunette fall ill it reinforces the theory. This may happen even though all black-haired, red-haired and blonde acquaintances may not present themselves to you when they catch a cold.

BetaShares used the investment example of holding a belief that ASX shares are superior to overseas markets.

“Positive forecasts for the Australian market may be accepted without question, while information supporting strong performance of international equities may be discounted,” the blog post read.

“This may help us justify being invested in only Australian equities with little diversification.”

The moral here is to evaluate all information neutrally, regardless of whether it supports or refutes existing beliefs.

Illusion-of-control bias

This is the false belief of investors that they have influence over a situation that they can’t possibly control.

The movement of a stock’s price, for example.

“This can lead to investors being impatient and trading in and out of the market under the assumption they can control the investment outcomes,” stated BetaShares.

“It can also lead to overconfidence and taking larger than usual risks.”

Always remember the things about your investment that you can definitely control, like purchase price and exit price. Outside of that, there is not a lot that retail investors can influence.

Regret bias

This is when the fear of later regret paralyses decision making.

“Under the influence of this bias, investors start to anticipate and fear the regret that may come with incurring a loss or forfeiting a gain.”

Regret bias makes investors “timid” and unwilling to try different opportunities.

“This may lead to missing out on new – but unfamiliar – investment opportunities such as emerging markets or new sectors, such as technology.”

Perhaps the best way to combat this bias is to remember there can also be regret after not taking action.

Conservatism

Conservatism makes investors stick to their existing views while sacrificing important new information.

“If a recent stock or market outlook is poor and is at odds with a previous positive outlook on the economy or stock, there is a tendency to disregard the latest set of information,” the BetaShares blog read.

“It means we may under react to fundamental information.”

This bias can be overcome by treating later information with as much credibility as early impressions.

The post 5 human urges that stop you from making money appeared first on The Motley Fool Australia.

More reading

• Here’s why the Newcrest (ASX:NCM) share price is in the red today
• Is the QBE (ASX:QBE) share price a bargain after falling 19% in a month?
• Why did the Flight Centre (ASX:FLT) share price have such a volatile time in 2022?
• The Bank of Queensland (ASX:BOQ) share price has lost half its value in 15 years. How is the bank’s turnaround strategy going?
• The AMP (ASX:AMP) share price has dumped 16% in under 4 weeks. What’s happening?

Motley Fool contributor Tony Yoo 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 Bruce Jackson.

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The QBE Insurance Group Ltd (ASX: QBE) share price has been a poor performer in recent weeks.

Since this time last month, the insurance giant’s shares are down a disappointing 19%.

What’s going on with the QBE share price?

There have been a few catalysts for the weakness in the QBE share price over the last few weeks.

These include its shares trading ex-dividend for its final dividend, the east coast floods, and its full year results release.

In respect to the latter, for the 12 months ended 31 December, QBE delivered a 25.7% increase in gross written premium to US$18,453 million. This ultimately led to the insurance giant reporting an adjusted cash net profit after tax of US$805 million.

While this may look strong at first glance, it was actually a big miss. The market consensus estimate was for a cash net profit after tax of US$870 million. Unsurprisingly, this led to its shares falling heavily following the release.

Is this a buying opportunity?

One leading broker that sees a lot of value in the QBE share price is Morgans. Earlier this week, the broker put the insurance giant on its best ideas list for the month of March. Its analysts believe the company’s shares are cheap at the current level.

It commented: “With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on ~12x FY22F PE.”

Morgans has an add rating and $13.50 price target on the company’s shares. Based on the current QBE share price of $10.36, this implies potential upside of 30% over the next 12 months.

The broker is also expecting a 58.2 cents per share dividend in FY 2022, which would mean a 5.6% dividend yield. All in all, this brings the total return on offer to approximately 36%.

The post Is the QBE (ASX:QBE) share price a bargain after falling 19% in a month? appeared first on The Motley Fool Australia.

More reading

• 3 more of Morgans’ best ASX share ideas for March
• Here’s why the QBE (ASX:QBE) share price is sliding 5% today
• QBE (ASX:QBE) share price backtracks as CEO realigns group’s strategy
• ASX 200 (ASX:XJO) midday update: Block, Zip tumble, QBE’s asset sale
• ‘$2 billion cost’: How are the floods impacting ASX 200 insurance shares this week?

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 Bruce Jackson.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price went on a rollercoaster ride throughout 2022. Its shares reached a year to date high of $21.27 on 17 February before sharply pulling back by almost 20% based on yesterday’s market close.

It appears that investors have mixed feelings about the value of Flight Centre shares in the current climate.

At Wednesday’s closing bell, Flight Centre shares finished the day up 2.91% at $17.70.

What happened to Flight Centre shares during 2022?

The volatility in the Flight Centre share price this year has driven by COVID-19, along with geopolitical tensions between Ukraine and Russia. This has resulted in a sluggish recovery across the travel market as the latter could spiral into a much larger regional conflict.

While Australia continued to deal with COVID-19, Flight Centre shares came to life in mid-February. This was due to the pandemic slowly subsiding and the world moving into a post-COVID-19 era.

As such, the company’s shares touched their highest level since early November 2021.

However, Russia’s war with Ukraine has put the world on edge and caused negative sentiment across rocked global markets.

With visibility surrounding the resumption of travel remaining murky, this has led to Flight Centre shares to sink. In the past month alone, the travel agent’s shares have fallen by around 12%.

With no end in sight for now, investors will be wondering how the company is tracking financially for the second-half of FY22.

It is worth noting that the business is a much leaner and more efficient cost base model compared to pre-COVID. This is expected to translate to bumper profits when considering the long-term.

Is the Flight Centre share price attractively valued?

A number of brokers weighed in on the Flight Centre share price following the company’s half-year results.

The team at Macquarie raised its 12-month price target by 5.6% to $18.85 for Flight Centre shares.

UBS also had a similar view, lifting its outlook by 1.3% to $19.10 per share.

On the other hand, Goldman Sachs cut its rating on the company’s shares by 4.4% to $19.50. Its analysts believe that there is still some value left in the travel agent over the next 12 months.

Flight Centre share price summary

It’s been a challenging year for Flight Centre shareholders, despite hovering in neutral territory in the last 12 months.

While hitting a low of $13.67 in August, the company’s shares have staged a small but choppy rebound for now. There is currently a strong support level from where Flight Centre shares trade right now.

The post Why did the Flight Centre (ASX:FLT) share price have such a volatile time in 2022? appeared first on The Motley Fool Australia.

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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 recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in Bank of Queensland Ltd (ASX: BOQ) inched higher on Wednesday and closed the session less than 2% higher at $7.69 apiece.

It’s been a difficult year for the bank’s share price and its projected outlook for 2022 and beyond, even following its widely announced digital transformation strategy from last year.

Sector-wide headwinds, saturation in the mortgage market and compressed net interest margins (NIMs) have plagued the ASX banks so far this year, and BOQ is no exception.

But could this turnaround for the bank yet? Let’s take a closer look.

How’s BOQ faring in 2022?

It’s been a terrible start to the year for BOQ shareholder who’ve seen their holdings erase 5% in value since trading recommenced in January.

Two attempted snap-back rallies attempted in December and then again in February were unsuccessful and failed to breach the $8.50 mark. On both occasions, shares sunk to 52-week lows, as shown below.

However, the entire financial sector has taken a beating this year such that the S&P/ASX 200 Financials index (XFJ) has also faltered more than 5% this year to date and is now flat over the past 12 months.

But that’s still no excuse for the lacklustre performance compared to some of its peers. The bank had embarked on a turnaround strategy of sorts back in 2021, fostering its time on a digital transformation.

It acquired ME Bank last year as well and by financial year’s end integration had already progressed well and the firm was excited to “continue to execute against [its] strategic transformation roadmap”.

This was supposed to be the turnaround year for the bank, whose share price has fallen from a 5-year high of $13.02, and has yet to make a recovery to pre-Covid highs.

As such BOQ is trailing a number o the other banking majors who have weathered the recent storm and held the fort and well.

But fundamentals are fundamentals, and one must look past the singular ‘catalysts’ that might move the needle in BOQ’s case.

Analysts at JP Morgan recognise this in a recent update to clients. The firm noted that BOQ now “lacks the deposit gathering capabilities of its peers” because it approximately 20 basis points above the majors for its short/medium term term deposits.

But this shouldn’t plague the share price too much, say’s JP Morgan, instead, the investment into digital transformation should begin to come through as a reduction in premium.

“BOQ believes the premium it will need to pay in the future will be lower than what it has paid in the past, reflecting improvements in Digital”, the broker said.

“Should this prove accurate, it would provide a tailwind to margins”.

As such, given this outlook and the potential for a successful digital transformation, JP Morgan analyst like BOQ’s investment prospects, particularly given its exposure to regional accounts.

This allows for a more diversified exposure, the firms says.

“BOQ remains our preference in the Regionals post results despite bottom-of-peer rate leverage”, it added.

BOQ share price snapshot

In the last 12 months the BOQ share price has collapsed more than 13% and is down 5% this year to date. Over the course of this previous month, it has fallen a further 4%.

The post The Bank of Queensland (ASX:BOQ) share price has lost half its value in 15 years. How is the bank’s turnaround strategy going? appeared first on The Motley Fool Australia.

More reading

• Is the Westpac (ASX:WBC) share price the cheapest bank to buy right now?
• 3 reasons why Soul Pattinson (ASX:SOL) is a strong ASX dividend share idea
• Looking for ASX shares in these uncertain times? Top broker says these sectors are now ripe for the picking
• Here’s how the Bank of Queensland (ASX:BOQ) share price performed in February
• 5 things to watch on the ASX 200 on Monday

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 Bruce Jackson.

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Shares in diversified financial services company AMP Ltd (ASX: AMP) finished the day less than 1% in the green on Wednesday at 90.5 cents apiece.

That’s a welcomed reversal of a downtrend that’s been in place since 10 February around about the time when AMP released its full year results for FY21.

AMP shares have since compressed hard from their previous high of $1.07 – achieved right before earnings – and are now around 16% behind at the close on Wednesday.

Why are AMP shares struggling?

ASX financial shares have softened over the past 4 weeks amid global conflict that has seen the ‘weaponisation’ of the global financial system.

Sanctions placed on the Russian central banking system and its ability to participate in global payments has rocked banking shares around the world.

The S&P/ASX 200 Financials Index (ASX: XFJ) has fallen 3% in the past month and is now down 5.5% since trading recommenced on January 4.

Meanwhile, the S&P 500 Financials Sector index (INDEX: SPF) has tanked 12% whereas the BetaShares Australian Financials Sector ETF (ASX: QFN), SmartShares Australian Financials ETF (ASX: ASF) and the Nasdaq Bank Index (NASDAQ: BANK) have each sunk 3.5%, 5% and 10% respectively.

Each of these proxies for the Australian and global financial sector illustrates that sentiment on financial shares is quite low right now, and investors are looking to unload their positions.

AMP is no different – its share price has collapsed almost 7% in the past month and is therefore trailing the diversified ETF products listed above.

Not only that, but AMP also opted to withhold paying a dividend in its most recent set of results, giving shareholders a lower total return and also less cover over the downside.

Seeing as AMP’s share price has continued to decline over the past 1–5 years on a consistent basis, the trend observed over the last few weeks isn’t out of the norm for shareholders.

In just the last 3-months, shares have tumbled from a previous high of $1.20 on 8 November – itself basically at 52-week lows as well.

So when taking a more pragmatic approach, arguably, the downward momentum was already in place for AMP, and the recent world-staged events were the right ‘spark’ to have them crashing lower.

A series of scandals, wrongdoings and ongoing investigations have marred the AMP share price during this time.

Check out AMP’s performance on the chart versus the same instruments listed above, only this time over a 5-year period. The value gap continues to widen as time goes on.

AMP share price snapshot

In the last 12 months, the AMP share price has collapsed more than 38% after sliding another 10% this year to date.

During the previous month alone, shares have fallen another 6% and are also down 6% in the past 5 days of trading.

The post The AMP (ASX:AMP) share price has dumped 16% in under 4 weeks. What’s happening? appeared first on The Motley Fool Australia.

More reading

• Why did the AMP (ASX:AMP) share price leap 8% in February?
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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 Bruce Jackson.

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If you’re looking for exposure to the healthcare sector, then you may want to consider the two ASX shares listed below.

These ASX healthcare shares have recently been named among the best shares to buy this month by the team at Morgans. Here’s why the broker is bullish on these ASX shares:

Cochlear Limited (ASX: COH)

The first ASX healthcare share that Morgans is a fan of is this hearing solutions company. The broker likes Cochlear due to its leadership position in implantable hearing solutions and the improving outlook for demand. Morgans believes the latter is pointing to an improving earnings profile.

The broker explained: “Cochlear maintains a dominant position in the implantable hearing solutions segment. While we continue to believe a full recovery from Covid-based disruptions still has time to play out, improving demand and strong pipeline, coupled with management’s increasing confidence, is all suggestive of an improving earnings profile.”

Morgans has an add rating and $233.20 price target on the company’s shares.

ResMed Inc (ASX: RMD)

Another ASX healthcare share that the team at Morgans rates as a buy this month is sleep treatment focused medical device company, ResMed. Its analysts rate ResMed highly due to its very positive long term outlook, which is being underpinned by the company’s digital platform.

Its analysts commented: “While we believe the next few quarters will likely be volatile, as Covid-related demand for ventilators continues to slow and core sleep apnoea volumes gradually lift, nothing changes our medium/longer term view that the company remains well-placed as it builds a unique, patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.”

Morgans currently has an add rating and $40.46 price target on ResMed’s shares.

The post 2 of the best ASX healthcare shares to buy now according to analysts appeared first on The Motley Fool Australia.

More reading

• 3 more of Morgans’ best ASX share ideas for March
• You can’t pick the bottom, but these 4 ASX shares are already bargains: expert
• Why does this broker say to sell Cochlear (ASX:COH) shares in 2022?
• 2 ASX healthcare shares analysts rate as buys
• Analysts name 3 ASX 200 shares with potential upside of 20%+

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. owns and has recommended Cochlear Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At the latest Westpac Banking Corp (ASX: WBC) share price, is it the cheapest bank that Aussies can buy?

Westpac used to be the second biggest bank in Australia. However, the deterioration of its market capitalisation and the strength of National Australia Bank Ltd (ASX: NAB) has meant that it has slipped down the rankings.

But the market capitalisation doesn’t necessarily mean one bank is cheaper than another.

One of the popular ways to compare banks is by the multiple that their earnings are valued at. This is also called the price/earnings ratio, or p/e ratio.

There are many different banks to compare on the ASX.

Westpac is one of the largest ones. NAB, Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) are the other big four banks.

Then there are a few smaller financial institutions like Bank of Queensland Limited (ASX: BOQ), Bendigo and Adelaide Bank Ltd (ASX: BEN) and Mystate Ltd (ASX: MYS).

Suncorp Group Ltd (ASX: SUN) and Macquarie Group Ltd (ASX: MQG) also have sizeable banking divisions, but they have large non-banking operations as well which makes them less comparable.

At today’s Westpac share price, is it the cheapest bank?

Using the earnings estimates on Commsec, let’s compare the different forward earnings multiples for FY23 – there isn’t much of FY22 left, which included differing COVID-19 impacts.

The Westpac share price is valued at 12x FY23’s estimated earnings.

Other banks

CBA shares are currently valued at 18x FY23’s estimated earnings.

The NAB share price is valued at 13x FY23’s estimated earnings.

ANZ shares are valued at 11x FY23’s estimated earnings.

So, of the big four ASX banks, Westpac is not the cheapest. But it is the second cheapest on the projected earnings side of things.

But what about the smaller banks?

The BOQ share price is valued at 10.6x FY23’s estimated earnings, so it’s a little cheaper than ANZ.

Bendigo Bank shares are priced at 12x FY23’s estimated earnings.

The Mystate share price is valued at 12x FY23’s estimated earnings.

Is the Westpac share price a buy?

It may not be the cheapest bank on the ASX, but analysts can still rate the business as a buy.

Brokers are pretty mixed on the bank at the moment. For example, Morgans and UBS both rate Westpac as a buy, with price targets of $29.50 and $27 respectively. That implies a potential upside over the next year of 34% and 23%, respectively. Both of these brokers say that Westpac is their favourite bank.

However, others are less convinced. The broker Morgan Stanley only rates Westpac ‘equal-weight’ because of uncertainty about the revenue, with a price target of just $22.20 – that’s only slightly higher than where it is right now. But, it did note the start of Westpac’s cost reduction actions.

Credit Suisse is another broker that is ‘neutral’ on the bank with a price rating of $23. That would imply a mid-single-digit rise for the Westpac share price.

The post Is the Westpac (ASX:WBC) share price the cheapest bank to buy right now? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Bendigo and Adelaide Bank Limited. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Monash Investors portfolio manager Sebastian Correia reveals the ASX share he’d hold for years, and the one he wished he had for years.

The ASX share for a comfortable night’s sleep

The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?

Sebastian Correia: That question, we’ve been asked that in a variety of different ways before. It’s often the kiss of death for stocks.

A lot can change in four years, right?

Back in 2018, I don’t think many of us would’ve predicted we’d have a global pandemic, or, even before it ended, the biggest conflict in Europe since World War II. 

But look, all exogenous risks aside, I’d be happy to hold Johns Lyng Group Ltd (ASX: JLG) for four years because of all the points I mentioned above. It ticks all the resilience points that I just mentioned around the pricing power, cash flow generation, and it’s got strong tailwinds behind it. It’s got an untapped North American market, which is about $100 billion at a much higher margin.

Climate change-influenced weather patterns are provided as a tailwind. I don’t like to factor that in my forecast, but that’s also just something to have on the back burner. And because of inflation, if they can pass on those pricing costs, they can maintain their margins and therefore be even more strongly positioned to take advantage of any opportunities that come up in the market to acquire. 

It’s got a couple of adjacencies — strata management, for example. I’m very sceptical about synergies when management mentions them, but there’s a lot of plausible synergies I think have the potential to be exploited if they so choose. So there’s a lot there that you could get excited about.

The one thing about John Lyng is that… the market realises it’s a high-quality stock, and therefore it could trade at a higher valuation than I would like. With OFX Group Ltd (ASX: OFX), it’s so easy to get that upside, right? With JLG, they have to execute against the expectations that they’ve set, but they’ve been able to do so for so long in the past. Having spoken to management several times, I’m quite confident that they can do that subject to some other crazy thing that would happen in the markets, like another war or something.

MF: The share price has cooled off a little bit this year.

SC: Yes, exactly. The CEO, Scott Didier, bought another million dollars worth of stock on-market, I think, two weeks ago. So he obviously sees that it’s been oversold, and I would tend to agree. 

And the last thing I’d mention on that one is just that four years, based on current information, is a long time.

When I’d spoken earlier around Monash, when they set it up, they had developed or observed a broad suite of recurring business situations and patterns of behaviour. This is one of them that informs our idea generation. That is, John Lyng consistently exceeded consensus earnings to expectations over the years. 

For example, in December 2019, the analyst consensus revenue forecast for financial year 2022 was about $465 million. By the next year, so by December 2020, this forecast for that same year… had grown by 23% to $570 [million]. Then three years on, by December 2021, that same year FY 2022’s revenue forecast had grown by 70%. 

So each year, the analysts are forced to increase their earnings, or the revenue expectations in this case for the stock, because they just happened to hit their milestones so successfully.

Looking back

MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

SC: Yeah, I’ve got plenty. It’s a part of being a fund manager. 

Balancing conviction in a position while the price stands against you is quite hard. So at Monash, we’ve developed almost like a pre-mortem selling discipline that I’m exceptionally strict on following. So if the facts of the investment thesis change, even for a stock that I absolutely love, I don’t really have too much difficulty in selling to protect our investors’ capital. 

So I don’t really have too many regrets in that regard, but I have quite a few opportunities that we knew about but failed to buy in at the time and ended up being multibaggers.

The one that came to mind, when I thought about your question, was an extremely valuable lesson to me. It happened back in October 2019. And it involved a telecommunications company called OptiComm. 

OptiComm, before it got taken over by Uniti Group Ltd (ASX: UWL), constructed and maintained an alternative network to the NBN, arguably superior. The beauty of the business was that the residential developers would pay OptiComm to come in, and build, and integrate its network into the development project. After the completion of the project and the residents moved in, OptiComm would then earn recurring revenue by providing the internet connectivity through an approved list of retail service providers that they managed.

So it was a phenomenal business model. In essence, it was getting paid to build an asset that they controlled, and from which it received recurring revenue. When someone else pays for your cap-ex, and you get to cop all revenue on the property…

MF: Daylight robbery!

SC: Yeah, exactly. So I was quite convinced at that time that it was going to be a success. And I did the DCF [discounted cash flow] valuation modelling and did all the due diligence, and it was well above our investment hurdle of 60% upside. But we didn’t buy because we had some concerns around a large chunk of stock that was going to come out of escrow in the next few weeks or something like that.

And that was when it was about $3. And in less than a year, it more than doubled, before being acquired by Uniti Wireless Group at a premium. 

Luckily, I can say I learned from that mistake because I did a lot of due diligence into Uniti when they acquired that. And we took a stake in Uniti… But oh, how I wish I could have been in there from the beginning.

The post I’m still kicking myself for missing the ASX company with the perfect business model: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo 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 Uniti Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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