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The PlaySide Studios Ltd (ASX: PLY) share price has continued its remarkable run on Thursday morning.

At the time of writing, the video game developer’s shares are up 18% to a record high of $1.42.

This means the PlaySide share price is now up over 250% since this time last year.

Why is the PlaySide share price rocketing higher?

Investors have been bidding the PlaySide share price higher today after it announced a deal with one of the world’s largest video game developers.

According to the release, the company has signed a 10-month fixed price work for hire agreement with Activision Blizzard, that will see PlaySide provide production, engineering and user interface development services to the video game giant.

Activision Blizzard is the company behind popular franchises such as Candy Crush, World of Warcraft, and Overwatch. It is in the process of being acquired by Microsoft for US$68.7 billion.

Management notes that this deal reflects its strategy of targeting larger contracts with AAA studios and important partners that have strategic significance.

It believes that developing a strong relationship with a major global brand such as Activision Blizzard through quality delivery and partnering will be a long term strategic benefit and reinforces its credentials as a global premier service provider in the industry. No financial terms have been disclosed.

PlaySide’s CEO, Gerry Sakkas, commented: “The Company is delighted to secure this contract with Activision Blizzard, one of the world’s largest game Developers and Publishers. Their portfolio of titles is a collection of some of the most prominent titles in the industry. PlaySide is very excited to be working with Activision Blizzard showcasing our AAA game development capabilities and this agreement is further recognition of the progress the Company has made on the global stage”

The post Why is the PlaySide (ASX:PLY) share price rocketing 18% to a new record high? appeared first on The Motley Fool Australia.

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• Playside (ASX:PLY) share price tanks 10% on BEANS project update
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• Playside Studios (ASX:PLY) share price soars 21% amid NFT gold mine
• Why is the Playside Studios (ASX:PLY) share price on pause 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 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 Mirvac Group (ASX: MGR) share price is on the move on Thursday morning following the release of its half year results.

At the time of writing, the property company’s shares are up 1% to $2.64.

Mirvac share price rises following solid first half growth

• Statutory profit up 44% to $565 million
• Earnings before interest and tax (EBIT) up 8% to $391 million
• Operating profit after tax up 9% over the prior corresponding period to $297 million
• Earnings per share up 9% to 7.5 cents
• Operating cash flow down 6.8% to $413 million
• Half year distribution up 6% to 5.1 cents per share
• Full year guidance reaffirmed

What happened during the first half?

For the six months ended 31 December, Mirvac delivered a 44% increase in statutory profit to $565 million and an 8% lift in EBIT to $391 million.

The latter was driven by a 248% increase in Commercial & Mixed Use Development EBIT to $73 million and a 17% lift in Residential EBIT to $89 million, which was partially offset by weakness in the key Integrated Investment Portfolio (IIP) business. Due largely to the impact of lockdowns, IIP posted a 5% decline in EBIT to $270 million.

This ultimately led to an operating profit after tax of $297 million, which was up 9% over the prior corresponding period. This compares favourably to the market consensus estimate of $250 million.

Management commentary

Mirvac’s CEO & Managing Director, Susan Lloyd-Hurwitz, was pleased with the company’s performance given the difficult operating environment.

She said: “Today’s result reflects our continued focus on carefully navigating the ongoing disruption caused by the global pandemic, while highlighting the strength of our diversified and integrated business model.”

“As we expected, the extended lockdowns in the first half of the financial year impacted the performance of our Integrated Investment Portfolio, concentrated in Retail. However, this was offset by a strong performance in our development businesses.”

“In Residential, for example, we continued to see strong sales momentum despite the roll-off of government stimulus, with 95 per cent of forecast EBIT for FY22 already secured. Successful pre-leasing and execution in Commercial & Mixed Use also supported earnings and asset revaluations, as we continue to focus on creating and curating high-quality assets that will deliver future income to the Group,” Lloyd-Hurwitz concluded.

Outlook

Management acknowledges that the Omicron variant is presenting a number of challenges, such as supply chain constraints and labour shortages. It also notes that the extension of the Commercial Code of Conduct for retail tenants is likely to put pressure on cash collection rates in the short term.

However, management remains positive on the company’s prospects and has reaffirmed its guidance for FY 2022.

Susan Lloyd-Hurwitz commented: “Our strong balance sheet, the secure income stream from our high-quality Investment portfolio, our robust commercial development pipeline, and a high level of residential pre-sales ensures our business remains resilient. As a result, we have retained guidance of at least 15.0 cents per stapled security in FY22, noting that we will continue to closely monitor our operating environment.”

The post Mirvac (ASX:MGR) share price higher after overcoming Omicron to deliver solid earnings growth appeared first on The Motley Fool Australia.

More reading

• Broker upgrades CBA (ASX:CBA) shares to buy rating following ‘great’ half
• Why Meta Platforms stock just jumped higher
• 2 ASX shares for the win in 2022
• NAB (ASX:NAB) share price in focus after cash earnings smash analyst estimates
• Are these the best ASX 200 blue chips to buy right now?

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 Commonwealth Bank of Australia (ASX: CBA) share price is pushing higher again on Thursday morning.

In morning trade, the banking giant’s shares are up 0.5% to $100.00.

This means the CBA share price is now up almost 7% this week.

Can the CBA share price keep rising?

One leading broker that believes the CBA share price still has room to climb higher from its current level is Bell Potter.

According to a note released this morning, its analysts have upgraded the bank’s shares to a buy rating with a $108.00 price target.

Based on the current CBA share price, this implies potential upside of 8% for investors over the next 12 months.

In addition to this, the broker is forecasting CBA to pay a $3.87 per share fully franked dividend in FY 2022. If we add this into the equation, the total potential return on offer with its shares stretches to 12%.

What did the broker say?

Bell Potter was pleased with CBA’s performance during the first half and notes that its cash earnings came in well-ahead of its estimates.

It commented: “CBA’s $4.75bn cash NPAT was 8% higher than our forecast. […] Cash NPAT was nearly on par with 2H21, a great outcome. There was also investment in operational execution (in line with the bank’s strategic priorities) coupled with a return of excess capital to shareholders of $2bn (on-market share buyback; surplus capital post buy-back would be around $4bn).”

This stronger than expected performance has led to Bell Potter increasing its cash earnings estimates for FY 2022 and FY 2023 by 11% and 8%, respectively. It is now forecasting cash earnings of $9,704 million and $9,842 million for the two financial years.

All in all, it appears to believe this makes the CBA share price great value at the current level.

The post Broker upgrades CBA (ASX:CBA) shares to buy rating following ‘great’ half appeared first on The Motley Fool Australia.

More reading

• Why CBA, Computershare, Dicker Data, and Temple & Webster shares are on fire today
• Here’s what you need to know about the CBA (ASX:CBA) $2 billion share buyback
• Rising tide? Here’s why ASX 200 bank shares are having such a good run today
• Everything you need to know about the CBA (ASX:CBA) interim dividend
• ASX 200 (ASX:XJO) midday update: CBA impresses, Mineral Resources delivers a shocker

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

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

What happened

Shares of Facebook parent Meta Platforms (NASDAQ: FB) finally got some love today. Following a year-to-date beating that was worsened by the company’s disappointing fourth-quarter guidance, the stock rose by 5.37% on Wednesday.

The tech stock was likely up due to a combination of factors, including an upbeat day for the overall market and an analyst’s move to reiterate a buy rating for Meta Platforms’ shares.

So what

The stock’s more than 30% drawdown following Facebook’s fourth-quarter earnings report is creating a great buying opportunity, according to Tigress Financial analyst Ivan Feinseth. The analyst has a $466 12-month price target on the stock, as well as a “strong buy” rating. The analyst says that similar warnings of future revenue growth slowdowns in the past proved to present great buying opportunities; Feinseth implies that this situation could prove to play out similarly as it has in the past.

Meanwhile, the overall market is having a good day. As of this writing, the S&P 500 is up 1.1% and the tech-heavy Nasdaq Composite is up 1.5%. This optimism in the market could be bolstering returns for Meta Platforms stock.

Now what

In Meta’s fourth-quarter earnings release, the company’s CFO guided for top-line growth of just 3% to 11% in Q1. The company expects multiple headwinds to weigh on its business, including the impact of recent changes to the way ads are tracked and measured on Apple‘s iOS and a tough year-ago revenue comparison. 

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

The post Why Meta Platforms stock just jumped higher appeared first on The Motley Fool Australia.

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• Meta Platforms’ plummeting stock: Is it a buy?
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Daniel Sparks owns Apple. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Apple and Meta Platforms, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple and Meta Platforms, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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It is no secret that ASX shares have been volatile to start off 2022.

The fear is that interest rates will rise and that will put a dampener on future earnings of growth companies and the supply costs of even traditional businesses.

As such, experts are warning investors to be selective about the shares they buy during the current dip.

Investors Mutual Limited senior portfolio manager Simon Conn is currently finding “good value” in 2 particular ASX sectors — consumer staples and communications.

“Both have got fairly resilient demand,” he said in a Livewire video.

“They’re able to have some pricing power and, particularly, the telcos are not subject to big cost of goods sold increases. Stocks in that sector look attractively priced for our money.”

Conn named 2 ASX shares in those industries ripe for the picking at the moment:

Australians can’t live without their phones and internet

It’s been a miserable time for TPG Telecom Ltd (ASX: TPG) shareholders since the stock debuted 19 months ago after a merger between TPG and Vodafone.

The share price has tumbled 32% over that period.

But it has resisted the general S&P/ASX 200 Index (ASX: XJO) downturn this year, remaining flat.

“We really like TPG Telecom. It’s the number 3 player,” said Conn. 

“It’s a fully integrated telecommunications business that has been impacted by COVID, with the lack of roaming, as people haven’t been travelling and overseas arrivals haven’t been coming into the country.”

The company has some clear channels for earnings growth, he added.

“There’s the fixed wireless opportunity, which we think can grow their earnings going forward,” he said.

“Telstra Corporation Ltd (ASX: TLS) just sold their towers business for 28 times EBITDA. TPG trades at 8 times and they have a similar asset base, which they could then sell and stake in to crystallise some value and pay down debt and accelerate the increase in dividends.”

Conn noted that TPG shares are going for about 13 times cash-adjusted earnings per share and pay out a nice 2.46% dividend yield.

“It’s a business that just looks very, very cheap and under-owned for us.”

Say cheese

Dairy goods producer Bega Cheese Ltd (ASX: BGA) has seen its share price fall in line with the general market this year. 

The stock is 7% lower than where it started 2022.

Conn likes Bega as a consumer staples play and thought the Lion Dairy acquisition last year was a winner.

“That’s really enhanced the transition that business is making to a more branded consumer staples business,” he said. 

“That generates a much higher margin — really driving the business away from their more commodity-based routes.”

Bega shares are great value at the moment, he added.

“The business is trading at about 19 times and an EBITDA multiple of 8 times, which is a discount to international peers,” said Conn.

“Obviously, it’s been impacted by COVID in the last six months, but as those unwind, the business has some pricing power and we think it’s really well placed going forward.”

The post 2 ASX shares for the win in 2022 appeared first on The Motley Fool Australia.

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• Is now the time to rid your ASX share portfolio of COVID losers?
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• Is the TPG Telecom (ASX:TPG) share price good value?
• Dividend investors should put these 2 top ASX shares on the watchlist

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 owns and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom 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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The National Australia Bank Ltd (ASX: NAB) share price will be in focus this morning.

This follows the release of the banking giant’s first quarter update.

NAB share price on watch following Q1 update

• Revenue up 8% over the FY 2021 second half quarterly average
• Cash earnings up 12% to $1.8 billion
• Cash earnings before tax and credit impairment charges up 13%
• Net interest margin down 5 basis points to 1.64%
• CET1 ratio of 12.4%

What happened during the quarter?

For the three months ended 31 December, NAB was on form and delivered an 8% increase in revenue over the second half quarterly average of FY 2021.

Management advised that this reflects higher volumes across housing and business lending, increased fees and commissions, and a recovery in Markets & Treasury (M&T) income. Excluding M&T, NAB’s revenue rose 5% for the period.

As with the rest of the big four banks, NAB was unable to avoid margin pressures from home loan competition. The bank’s net interest margin (NIM) declined by 5 basis points to 1.64%. This reflects competitive pressures and housing lending mix, partly offset by lower funding and deposit costs.

NAB’s expenses increased 2% during the quarter. This was driven mainly by higher salaries and leave costs, combined with investment to support growth, which was partly offset by productivity benefits. Despite this and emerging inflationary pressures presenting challenges, management remains confident it will achieve broadly flat expenses in FY 2022.

The bank’s asset quality remains strong. It reported a credit impairment charge (CIC) write-back of $35 million. This reflects the impact of higher house prices and improving asset quality across both housing and business lending and continued low specific charges.

Another positive is that the ratio of 90+ days past due and gross impaired assets to gross loans and acceptances decreased 13 basis points to 0.81%.

How does this compare to expectations?

The good news for the NAB share price is that the bank’s cash earnings appear to have smashed expectations.

According to a note out of Bell Potter, its analysts were forecasting cash earnings of ~$1.59 billion for the quarter.

This means NAB’s cash earnings of $1.8 billion is 13.2% ahead of the broker’s estimates. And it is worth noting that Bell Potter is one of the more bullish brokers out there.

Management commentary

NAB’s CEO, Ross McEwan, was pleased with the bank’s start to the year.

He commented: “NAB has started the 2022 financial year well. Cash earnings increased 12% compared with the quarterly average of 2H21, asset quality remained benign and good momentum has continued across our business despite the environment remaining competitive. Volumes have been strong over the quarter with lending and deposits each up $18 billion.”

“In Australia, over the three months to December 2021, home lending grew 2.6% and SME business lending increased 3.4%, and we gained market share across our core lending and deposit products. New Zealand loan growth was also strong at 2.2% over the same period.”

“These results reflect an ongoing focus on executing our strategy, making the bank simpler for customers and colleagues. This is evident in our improving customer net promoter scores in consumer and business over 1Q22, which are pleasingly no longer negative,” he added.

Looking ahead, Mr McEwan acknowledges that there is work to do but appears cautiously optimistic on the future.

He concluded: “There is more work to do but we are moving in the right direction. Disruptions to supply chains and labour markets caused by the recent spread of Omicron present challenges for some of our customers. While this creates uncertainty, we remain optimistic about the outlook for Australia and New Zealand and are well positioned to continue to grow with a strong balance sheet and disciplined execution of a clear strategy.”

The post NAB (ASX:NAB) share price in focus after cash earnings smash analyst estimates appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Rising tide? Here’s why ASX 200 bank shares are having such a good run today
• Will NAB shares give investors a dividend raise in 2022?
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• Looking to buy NAB (ASX:NAB) shares? Read what this broker says first

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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It will be a hard slog to harvest positive returns in the first half of this year.

That’s according to Morgan Stanley head of wealth management research Alexandre Ventelon, who believes Australia will follow the US in raising interest rates in 2022.

“This has historically coincided with poor risk-adjusted returns for equities as a rise in long-term bond rates places pressure on equity valuations, while increasing volatility in capital markets,” he posted on Livewire.

“In this context, we expect returns on equities and bonds to be limited in the first half of the year — even possibly negative.”

However, there are some pockets of hope if one knows where to look.

Ventelon named 2 particular ASX shares — one with 40% upside — that might do well while others crumble.

Bank with ‘materially better margin outlook’

Shares for Australia and New Zealand Banking GrpLtd (ASX: ANZ) have lost 5% of their value since mid-January.

But Ventelon’s team recently upgraded the rating of the stock.

“Morgan Stanley recently moved to an overweight recommendation on ANZ, given the bank’s diversified business mix, improving loan growth trends, as well as materially better margin outlook.”

He also believes ANZ has a “credible cost-reduction strategy” while boasting a now-lower credit risk profile.

“ANZ also had no return-on-equity dilution from the 2019-20 capital raisings and, moving forward, offers a strong capital position with ongoing buybacks and growing dividends.”

The Morgan Stanley analysts have slapped a price target of $31, which is about a 14% premium to the share price on Wednesday afternoon.

“The stock currently exhibits solid valuation support with a wide [price to earnings ratio] P/E discount to peers.”

ANZ shares closed Wednesday at $27.42.

ASX share with 40% upside

Ventelon’s team is bullish on the energy sector this year.

“Despite 2021 being one of the strongest years in the oil market in recent history, further strength lies ahead,” he said.

“With the prospect of low inventories and spare capacity by 2H, further demand recovery into 2023, and still limited investments, the oil market will likely be undersupplied in 2022.”

Among ASX shares, Ventelon likes the look of Santos Ltd (ASX: STO) to win on this theme.

“Santos is now a significantly larger company post its merger with Oil Search,” he said. 

“Morgan Stanley believes the market will reward a more modest growth profile which prioritises cash returns to investors along with a focus on de-leveraging.”

Santos’ recent numbers impressed Ventelon.

“Revenue was 15% higher than expected with the main driver being higher realised LNG prices. Currently, spot LNG prices are soaring at over US$30/mmbtu which is over 3x the 5-year average,” he said.

“Santos also provided guidance on year-end production costs which were better than Morgan Stanley’s forecasts.”

Morgan Stanley, with an overweight rating, has a price target of $10.40. This is a tidy 40% upside from the share price on Wednesday afternoon. 

Santos shares have climbed more than 12% for the year so far, closing Wednesday at $7.50.

The post 2 ASX shares to rise with higher interest rates appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Rising tide? Here’s why ASX 200 bank shares are having such a good run today
• ‘A lot of opportunities’: Why this broker is bullish on Santos (ASX:STO) shares
• Own ASX energy shares? Citi issues stark oil production warning
• This global financial giant is buying up Bitcoin. Could ASX banks be next?

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 Australian share market is home to a good number of high quality blue chip shares for investors to choose from.

Two blue chip ASX 200 shares that could be worth considering as additions to your portfolio right now are listed below. Here’s why analysts rate them as buys:

CSL Limited (ASX: CSL)

The first blue chip ASX 200 share for investors to look at is CSL. It is one of the world’s leading biotechnology companies with leadership positions in plasma therapies and vaccines.

And while plasma collection headwinds have been weighing on collections and investor sentiment again in FY 2022, CSL appears well-placed for growth once conditions improve. Particularly given strong demand for its immunoglobulins and vaccines, and its lucrative R&D pipeline. The latter is full of potential therapies that could boost sales materially in the future.

In addition, the company is in the process of making the major acquisition of Vifor Pharma for ~$17 billion. This will expand CSL’s leadership across an attractive portfolio focused on renal disease and iron deficiency.

Morgans is a fan of CSL. It currently has an add rating and $334.70 price target on its shares.

Rio Tinto Limited (ASX: RIO)

If you’re looking for resources sector exposure, then Rio Tinto could be an ASX 200 blue chip share to buy.

Rio Tinto is one of the world’s largest miners with a portfolio of world class operations across a number of commodities including aluminium, copper, and iron ore.

Goldman Sachs is positive on Rio Tinto and has a buy rating and $128.80 price target on its shares. It is bullish due to its attractive valuation, strong free cash flow, production growth potential, and its exposure to low emission aluminium.

In respect to the latter, Goldman commented: “In addition to copper production growth, RIO has one of the highest margin, lowest carbon emission aluminium businesses in the world, with over 2.2Mt of Ali production powered by hydro, and we think ELYSIS inert anode technology could be worth billions.”

The post Are these the best ASX 200 blue chips to buy right now? appeared first on The Motley Fool Australia.

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• How far off is BHP (ASX:BHP) from producing ‘green steel’?
• The ASX 200 just hit 3-week highs. What’s next?
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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. owns and has recommended CSL Ltd. 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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Could the Nick Scali Limited (ASX: NCK) share price be an opportunity for investors after its FY22 half-year result. Are investors now comfortable about saying it’s a buy?

Nick Scali is an ASX retail share that specialises in selling furniture. It recently intensified its focus on furniture with the acquisition of Plush-Think Sofas for an enterprise value of $103 million.

Before we get to expert thoughts on the Nick Scali share price, let’s look at how the business performed in the first six months of FY22.

FY22 half-year result

Whilst revenue increased by 5.4% to $180.3 million, the net profit after tax (NPAT) declined by 6.6% to $35.6 million. This came after a decrease in the profit margins. The earnings before interest and tax (EBIT) margin declined 280 basis points to 30.6%.

However, the gross profit margin increased by 30 basis points to 64.3%.

This result covered a period that included months of lockdowns in Melbourne and Sydney, where it had to close over 55% of the store network, whilst managing widespread disruption to the supply chain.

However, the business saw a much improved performance in the second quarter with written sales orders increasing by 44% with all stores reopened by mid-November and the Plush stores contributed “significantly” in November and December.

Growth continued to be strong going into January, with written sales orders for the group up 31% on the previous year. However, Nick Scali’s store trading was down 6% after a 25% decline in-store traffic. However, there was a marked improvement in traffic and sales orders towards the end of the month. Plush sales orders were in line with the previous year.

Overall, the outstanding order bank at the end of January 2022 was higher than the previous year. The Nick Scali’s suppliers have recently reinstated normal lead times, and management are expecting this to help revenue growth in the coming months. However, shipping costs and the availability of containers remains uncertain, which could hurt profitability in the second half of FY22.

What do analysts make of the result and the Nick Scali share price?

The broker Citi was impressed by the Nick Scali result, with a large order book expected to help the ongoing performance. However, it recognised the supply chain impacts that Nick Scali is facing.

Based on the profit projections, the Nick Scali share price is valued at 12x FY22’s estimated earnings with a grossed-up dividend yield of 7.6%.

Nick Scali share price snapshot

Over the last six months the Nick Scali share price has risen 12% over the past six months and 23% over the last year.

The post Is the Nick Scali (ASX:NCK) share price a comfortable buy after HY22? appeared first on The Motley Fool Australia.

More reading

• No deal: Nick Scali (ASX:NCK) share price lifts as latest rumours quashed
• ASX retail shares have slumped in 2022. Could there be more pain to come?
• Why is the Nick Scali (ASX:NCK) share price dumping 13% so far this week?
• Could this be the biggest issue faced by ASX retail shares heading into earnings season?
• Nick Scali (ASX:NCK) share price jumps on first-half revenue increase

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 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 is still 42% lower than where it was just before the COVID crash.

Does this mean that the business could see a share price rise of almost 75% once its pre-COVID profit returns?

It might not be as simple as that, according to one expert.

It’s true that Australia’s international borders are expected to start opening up again. Prime Minister Scott Morrison recently announced that the national cabinet had decided that Australia will open borders to all remaining visa holders on 21 February 2022.

One condition is that people must be double vaccinated to come to Australia and they will need to provide proof of vaccination. A proof of medical exemption will be required for those that cannot be vaccinated. Unvaccinated travellers will have to go through hotel quarantine if they are granted permission to enter the country.

So, with domestic borders almost back to normal and international borders about to open up, could the Flight Centre share price see a quick, large recovery?

Don’t forget about the capital raising

A key difference for Flight Centre is that there are now far more shares on issue for the business (and other ASX travel shares) than there were before the pandemic. That’s because of the capital raising it completed at the start of the pandemic troubles.

According to Marcus Padley from Marcus Today, writing on Livewire, he pointed out that, at the time of the article, Flight Centre shares were down by 53.4%, but the total market capitalisation was only down by 17.2%.

Even if Flight Centre goes back to earning a full-year net profit to a similar level as FY19, that profit is being shared between a much larger number of shares.

In other words, the earnings per share (EPS) will theoretically be materially lower even when the net profit figure fully recovers. EPS can be a key measure to decide the valuation of a business.

But is the Flight Centre share price an opportunity?

Mr Padley had this to say:

This doesn’t mean there isn’t a handsome trade to be had buying travel stocks for a sentiment improvement on the border opening, but it does tend to suggest that you need to be aware that it is not a “value” trade, it’s a “sentiment” trade and is probably a trade, not an investment.

Many of the leading brokers currently rate Flight Centre as a hold or are ‘neutral’ on the company, such as Macquarie. The broker thinks profit will be hurt again in FY22, but FY23 could be the year when volume finally comes back.

Credit Suisse currently rates the Flight Centre share price as a buy with a price target of $23.30. On this broker’s numbers, it’s valued at 15x FY23’s estimated earnings.

The post Is the Flight Centre (ASX:FLT) share price potential recovery as big as it seems? appeared first on The Motley Fool Australia.

More reading

• Broker says buy Webjet (ASX:WEB) instead of Flight Centre shares
• The ASX 200 just hit 3-week highs. What’s next?
• Here are the top 10 ASX shares today
• ‘On the way back’: Flight Centre (ASX:FLT) share price takes off on border reopening
• Why Flight Centre, Macquarie, Super Retail, and Suncorp shares are racing higher

08Motley 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 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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