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The Webjet Limited (ASX: WEB) share price will be on watch on Wednesday.

This follows the release of the online travel agent’s highly anticipated half year results.

Webjet share price on watch after TTV rebounds strongly

• Total transaction value (TTV) of $663 million
• Revenue of $55.4 million
• Operating expenses of $71.2 million
• Underlying EBITDA loss of $15.9 million
• Statutory EBITDA loss of $114.4 million
• Underlying net loss after tax before acquisition amortisation of $34.2 million
• Statutory loss after tax of $132.2 million
• Cash balance of $446 million at the end of September
• Deferred interim FY 2020 dividend of 9 cents to be paid in December

What happened during the half?

For the six months ended 30 September, Webjet experienced a significant improvement in booking volumes, particularly from its WebBeds business which is now producing positive cash. This led to the company recording TTV of $663 million and revenue of $55.4 million for the period.

This is more than double the TTV of $267 million and revenue of $22.6 million during the six months ended December 31 2020. No direct comparison was provided for the same period last year. This year Webjet changed its financial calendar to a 31 March year-end.

As for earnings, or rather its losses, Webjet reported an underlying EBITDA loss of $15.9 million and a statutory EBITDA loss of $114.4 million. The latter includes $72.3 million in non-operating expenses such as write-offs.

Surprisingly, despite the loss, Webjet’s improving outlook has given management the confidence to pay FY 2020’s deferred interim dividend of 9 cents per share. This will be paid on 23 December.

Commenting on the decision to pay a dividend, Webjet’s Chair, Roger Sharp, said: “Since Covid first impacted our business, we have built a strong capital base to ensure we are well positioned for the recovery. Although markets are recovering at different rates, our global reach means we have been able to leverage those markets recovering first and Webjet is once again generating positive cash. We are therefore paying the interim FY20 dividend that was deferred in April 2020 and would like to thank all our shareholders for their support.”

How does this compare with expectations?

This half year result appears to have been a bit of mixed bag, so it is hard to say which direction the Webjet share price will take today.

For example, Goldman Sachs was forecasting TTV of $668.6 million, revenue of $52.5 million, and an EBITDA loss of $13.4 million. This means Webjet has missed on TTV, beaten on revenue, and missed on EBITDA.

Management commentary

Webjet’s CEO, John Guscic, was pleased with the half and appears confident on the future.

He said “The half year results have demonstrated the power of Webjet’s geographic diversification and ability to sharply focus resources on those markets and customer segments that exhibit the earliest recovery patterns. In WebBeds, November TTV is already tracking at 63% of pre-Covid sales yet many key markets are still to open, and December is expected to eclipse November’s trading.”

Mr Guscic believes the shift to online booking will allow Webjet to win market share in the future.

“We see genuine opportunity to increase market share as consumers continue to shift to buying online and believe the exciting innovations offered by the Trip Ninja technology will play a key role in growing our share of the international flights market,” he added.

Another positive is that the company is approaching profitability in a strong financial position. The CEO revealed that this provides Webjet with potential opportunities to bolster its growth with acquisitions.

He commented: “Our reduced cost base, enhanced technology and strong customer service ethos, in conjunction with a culture of constant product innovation, places us in a powerful position to capture bookings as the recovery continues. Our strong capital base also ensures we can take advantage of strategic opportunities as they arise in a realigned and changing global industry.”

Mr Guscic also revealed that the third quarter has started positively and is tracking ahead of the second quarter, and expects this trend to continue in the quarters to come, before booking volumes eventually reach previous levels in around a year.

He explained: “While there remains short term uncertainty with pockets of new outbreaks around the world, we believe ongoing vaccinations, boosters and anti-viral treatments will stabilise the impact of Covid within the next 6- 12 months. Based on our current trajectory of outperforming the market in our WebBeds and Webjet OTA businesses, we believe we will be back at pre-Covid booking volumes by the second half of FY23 – October 2022 to March 2023.”

No guidance has been given for the second half or full year.

The post Webjet (ASX:WEB) share price on watch after reporting huge first half growth 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 recommended Webjet Ltd. 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 Appen Ltd (ASX: APX) share price has been a hot topic over the course of the last two years. The artificial intelligence data services company experienced tough trading conditions brought on by the COVID-19 pandemic.

At Tuesday’s market close, Appen shares fell 3.48% to $11.39 apiece. Despite consecutive losses across the past three trading days, its shares are up almost 5% in a month.

Mondrian acquires an interest in Appen

The London-based international investment firm, Mondrian Investment Partners, purchased a sizeable stake in Appen last week.

The firm bought a 5.1% interest or 6,272,348 ordinary shares in the company. This puts Mondrian as Appen’s fifth- largest stakeholder, behind notable companies such as HSBC, JP Morgan, Citicorp and C & J Vonwiller.

The date of the acquisition commenced back on 20 October and finalised on 19 November.

Mondrian manages over US$60 billion in both diversified equity and fixed income asset classes.

What’s ahead for Appen?

Appen completed its restructure in May, focusing on its core business interests. While its half-year results were underwhelming, the company expects an improved second half. This is supported by a strong order book, higher confidence in its pipeline, and the expected second-half revenue skew. The latter is due to its customers’ delivery schedule for e-commerce, digital advertising, and search programs.

Instead of reporting the usual double-digit growth, however, Appen is projecting a slightly lower FY21 underlying earnings before interest, tax, depreciation and amortisation (EBITDA). The company advised of a full-year FY21 EBITDA guidance of between US$81 million to US$88 million, down $2 million from previous estimates.

Are Appen shares a buy?

Since the company’s half-year results, a number of brokers weighed in on the Appen share price.

Analysts at Macquarie cut their price target on Appen by 20% to $11.80. Bell Potter followed suit, also slashing its rating by 15% to $11.50 per share.

The most recent broker note, however, came from JP Morgan at the end of August. The investment firm had a more bearish sentiment, reducing its outlook on Appen by a whopping 45% to $13.50.

Nonetheless, JP Morgan’s price target still implies an upside of around 15% based on the current share price.

Appen share price snapshot

It’s been a tough 12 months for Appen shareholders, with the company’s share price falling 66% and year-to-date, down 53%. Appen has a price-to-earnings (P/E) ratio of 37.72, and a trailing dividend yield of 0.88%.

Appen commands a market capitalisation of around $1.4 billion, with approximately 123 million shares on its books.

The post Own Appen (ASX:APX) shares? Here’s why this $US60b fund just bought a 5% stake appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras owns shares of Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd. The Motley Fool Australia owns shares of and has recommended Appen Ltd. 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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As Australia grapples with the double-vaccinated lifestyle, crazy house prices and still near-zero interest rates, major turbulence has rocked financial ASX shares.

For example, Westpac Banking Corp (ASX: WBC) shares have lost 15% over the past month, while the market turned on former darling Commonwealth Bank of Australia (ASX: CBA), shaving 10% off in the past week.

But with economic activity expected to pick up as the country moves beyond COVID-19 lockdowns, there will be no shortage of work for the finance sector.

Here are a pair of ASX shares that Wilson Asset Management analysts have singled out as ‘buy’:

The Tasmanian coming over to the mainland

With a market capitalisation of $512 million, MyState Limited (ASX: MYS) is definitely small fish compared to the big four banks.

Wilson equity analyst Sam Koch said the Tasmanian ASX share is starting to ramp up its presence on the east coast of the mainland.

“We recently participated in a capital raising the business did. They’re looking to deploy those proceeds in a way that could grow their loan book over time,” he told a WAM YouTube video.

“We think it could almost double their loan book over the next couple of years. MyState’s a buy.”

MyState shares have remained flat this year, just up 0.21% since the New Year’s fireworks.

ASX share going gangbusters in the US

Senior investment analyst Shaun Weick would buy Credit Corp Group Limited (ASX: CCP) right now.

Similar to MyState, shares for the debt buyer have remained flat in 2021, rising just 1.1%.

According to Weick, purchased debt ledger (PDL) volumes “have been depressed” in recent times due to the coronavirus pandemic.

“But we think as the economy reopens and the stimulus benefits unwind, you will see it pick up in credit growth activity.”

The analyst also thought Credit Corp leadership has done well to triple its “flow share” in the US market during the pandemic period.

“As those volumes recover, we can see a very strong growth trajectory for that US business — so we’ve got that one as a ‘buy’.”

Wilson Asset Management is not the only one high on this ASX share. Earlier this month, Ord Minnett slapped on a price target of $32 for the stock.

Credit Corp shares closed Tuesday at $31.15.

The post 2 financial ASX shares to buy right now: experts 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 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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The Treasury Wine Estates Ltd (ASX: TWE) share price has been a strong performer in 2021.

Since the start of the year, the wine company’s shares have risen almost 24%.

This is more than double the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.

Can the Treasury Wine share price rise further?

The good news is that one leading broker doesn’t believe it is too late to buy Treasury Wine’s shares.

According to a note out of Morgans, its analysts have retained their add rating and lifted their price target on the company’s shares to $14.06.

Based on the current Treasury Wine share price, this implies potential upside of approximately 19% over the next 12 months.

What did the broker say?

Morgans notes that Treasury Wine has recently announced the acquisition of Napa Valley-based luxury wine business, Frank Family Vineyards (FFV) for US$315 million (A$432 million). The broker is a fan of the deal and expects it fill a key gap in its portfolio and support margin expansion.

Its analysts commented: “The acquisition is in line with Treasury Americas strategy and will strengthen a key gap in its chardonnay portfolio. Importantly, FFV has generated solid earnings growth over many years and is a high margin business. It should see TWE achieve its margin target two years earlier than planned. The acquisition is immediately EPS accretive and US$5m of cost synergies are expected by FY24.”

This has ultimately led to Morgans upgrading its earnings forecasts and price target on the Treasury Wine share price accordingly.

Morgans concluded: “We have upgraded our forecasts, believing that the strategies TWE has in place will deliver solid earnings growth over coming years. We see recent share price weakness as a great buying opportunity in this high quality company. Add maintained.”

The post Cheers! Morgans tips Treasury Wine (ASX:TWE) share price to rise 19% 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 recommended Treasury Wine Estates 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 Commonwealth Bank of Australia (ASX: CBA) share price is valued at a premium compared to its big bank peers. But is it justified?

The first question is, how much of a premium is the biggest bank trading at?

It might be useful to look at what the banks are priced at compared to the estimated earnings for the 2022 financial year, which is the current financial year.

What’s the premium?

Let’s look at the estimates using the projections on Commsec.

The CBA share price is valued at 18x FY22’s estimated earnings.

Next, the Westpac Banking Corp (ASX: WBC) share price is priced at 11x FY22’s estimated earnings.

The National Australia Bank Ltd (ASX: NAB) share price is valued at 15x FY22’s estimated earnings.

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) is valued at 13x FY22’s estimated earnings.

This CBA valuation premium remains despite the big bank falling around 10% over the last week after the bank delivered its FY22 first quarter update.

How long has there been a CBA share price premium?

John Lockton from Wilsons notes that over the last few decades, CBA’s valuation – whether it’s earnings, dividends or the book value – has traded at a premium of between 15% to 20% consistently.

He points out that there are several metrics that could justify the CBA share price trading at a premium to the other big four banks: the higher return on equity, it is the dominant retail bank, its technology leadership, and a track record of a more consistent operating performance.

Whilst the bank has traded at a premium since 1990, the bank has also outperformed the other banks. The total return has almost been double what the second best bank, ANZ, has produced according to Mr Lockton.

The analyst noted that CBA has typically operated with a higher leverage ratio than its peers. Historically, CBA has held a lower level of liquid assets over the past 30 years relative to its total asset base, allowing for additional capital to be lent out to earn a return. Mr Lockton noted holding lower liquid assets needs to be treated carefully, as running out of cash is a terminal event for a bank.

CBA has generated more earnings growth over the years. Higher earnings and a limited share issuance has meant a higher return on equity (ROE). Over the past 30 years, CBA’s ROE has been 2-3 percentage points higher than peer banks, according to the analyst.

Is the CBA share price worth it?

Mr Lockton said regarding whether the premium would expand:

We have accessed a number of the common arguments put forward by investors to explain CBA’s premium multiple, and in short, are left unconvinced they adequately explain the valuation expansion.

The analyst went on to say that the FY22 first quarter update, which referenced a declining net interest margin (NIM), could be a catalyst for the premium to close up – which it already has somewhat.

There’s also the possibility the premium could close up further if the share prices of NAB, ANZ and Westpac outperform CBA from here.

Of the other three banks, the analyst’s preferred competitor is NAB, which is showing the most convincing early signs that its operational momentum can lift its ROE.

Mr Lockton finished by saying:

NAB is our preferred major bank. The outsized CBA valuation premium is hard to justify on the basis of the fundamental outlook. We see a real risk that the valuation premium erodes to a more modest level over the medium-term.

The post Is the CBA (ASX:CBA) share price premium relative to other big banks justified? 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 has recommended 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 part I of this edition, Katana Asset Management’s co-founder Romano Sala Tenna shares his insights and reveals the best performing ASX share in the Katana Australian Equity Fund.

Motley Fool: How would you describe the Katana Australian Equity Fund to a potential client? 

Romano Sala Tenna: What we’ve tried to do is remove any artificial constraints. So, constraints around sector, style, market capitalisation, etcetera.

We love constraints that add value to the process, but not where they artificially enable us to tick a box, as opposed to actually trying to get maximum returns.

We have 25% of our own monies in the fund under management, so we are very risk averse. That’s enabled us, over the longer-term, to be in the top quartile over every time frame.

We’re very proud of the fact that we’ve got a 16-year track record. Some funds have only a fraction of that. And we’ve delivered a 10.2% return per annum net of fees over that time frame, which puts us in the top-10 funds over 3 and 5 years.

MF: You invest largely without constraint to a company’s market cap. What are the pros and cons of investing in ASX small-caps compared to ASX 200 blue chips?

RST: The first thing to understand is that we should be able to invest across the spectrum. We shouldn’t artificially be constrained at what we look at.

Now on the downside for the smaller end of the market, you have issues around liquidity. The companies aren’t as diversified. And many don’t have the same sort of level of track record, as they’re in their infancy. You also have potential issues around corporate governance due to lower levels of scrutiny and research coverage.

On the positive side, because they are smaller they do fly under the radar. So you are more able to find diamonds in the rough, and companies early in their infancy. You are more likely to find businesses that are in a very strong growth trajectory, that you can ride for a long period of time. And when you compound those returns, they can be substantially greater than investing in large-cap companies.

MF: Have exchange-traded funds had an impact here?

RST: With the rise of ETFs going mainstream, we are seeing a lot more passive money as opposed to active money. I think passive money generally bodes well for large-cap companies compared to small-caps. So that digression between the small and large-cap part of the market is starting to expand further and you are starting to see more small-cap companies left behind.

MF: What’s been your best ASX share investment for the fund over the past year?

RST: Rather surprisingly, because we’re not overly strong in the tech sector, Uniti Group Ltd (ASX: UWL) has been our best performing stock over the last 12 months. And we’ve started to see things there that give us confidence for the future outlook of that company as well.

MF: How long have you been invested in Uniti?

RST: We’ve been invested for a number of years. But we’ve scaled that position up as we’ve grown in confidence. It’s now one of the top-3 positions in the fund. For smaller companies it takes time to grow that confidence in the business. So we’re more likely, with smaller companies, to scale our position up over time, as opposed to starting with a larger position.

MF: What made you decide to scale up with Uniti?

RST: On the macro level we like the thematic that we’re seeing come through and are able to play through Uniti Group. Also, we’re starting to see some really smart execution.

Multiple acquisitions are normally a bit of a red flag for us. But that actually worked in reverse here, because they’re making these acquisitions at below replacement cost. When they’re starting to pick up fibre [optics companies] they’re taking out a competitor, they’re growing their economies of scale, and they’re also doing it below replacement cost. And we like the fact that there’s a lot of growth we can tangibly put our finger on.

What we’ve seen in a very short time is the company generate huge free cash flow, and repair their balance sheet to the point they’ve announced a buyback. We think the outlook for this company is strong as they continue to grow their earnings.

MF: With Bitcoin (CRYPTO: BTC) and cryptocurrencies going mainstream and packaged in ETFs, what are your thoughts on these new assets?

RST: We’re still in that phase where we need to work out, is this a paradigm shift or is this the greatest bubble in history? There are some very convicted people on both sides of the debate.

From our end, we don’t have enough data points to know what the answer is. The longer that crypto continues to remain unregulated, the more it’s likely to lead to a paradigm shift in financial services. We could be witnessing one of those rare moments in history where we’re experiencing a genuinely new asset class being born.

It’s still too early to say that definitively, but there are some elements of that emerging.

One of the biggest risks to the market now is some of the irrational exuberance that’s occurred in certain sectors. And I’d put crypto into that category. Not so much for Bitcoin and ones that perhaps will survive, but for the 7,000 other cryptos that won’t survive. And that will wipe out enormous amounts of capital.

At Katana we are very risk averse. We’re going to make sure that we understand things fully, that it’s truly in our circle of competence, before we do become involved.

MF: Are you concerned about inflation in the year ahead? What steps are you taking?

RST: We had a big repositioning moment back in February and March this year, when we saw the bond yields have that substantial rally. That was the point we were convinced that inflation had arrived and that it was more than transitory.

That’s the big argument at the moment, is inflation structural or is it transitory? We think there are elements of both. There’s no doubt there have been some transitory influences, with supply chain disruptions from COVID-19 and the like. But we are also seeing some real structural elements. Hard commodities have increased dramatically. We’re seeing offshore rates increase and global freight rates at elevated levels. And we’re seeing the labour market tightening. That is going to have an impact on the Australian landscape.

(To learn more about the Katana Australian Equity Fund, click here.)

The post The surprising ASX tech share leading the charge: fund manager appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. 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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As the post-COVID era ramps up, double-vaccinated Australians are getting out and about to spend the money they saved during lockdown.

The most obvious beneficiaries of this are retailers.

But societal trends don’t automatically bring in revenue and profit — a business needs to know what it’s doing to take advantage.

So here are 3 retailer ASX shares that analysts at Wilson Asset Management recently nominated as buys:

Australians are hitting the pavements, so what will they need?

Wilson senior investment analyst Shaun Weick likes the look of Accent Group Ltd (ASX: AX1), which owns recognisable shoe retail brands like Hype DC, The Athlete’s Foot and Skechers.

“We think demand is going to bounce back really strongly,” he told a WAM YouTube video.

“If you have a look at the projections… you’ve got 10% to 15% growth per annum in the footprint.”

The group also has more nascent, emerging brands — such as Stylerunner — that could drive expansion.

“We also think acquisition of Glue provides a lot of potential upside through a turnaround.”

The market has agreed with Weick, with Accent shares pushing up about 27% over the past 2 months.

Billionaire businessman Bretty Blundy is now a shareholder, according to Weick. Blundy has experience in the youth fashion area, having overseen the listing of Universal Store Holdings Ltd (ASX: UNI) last year.

Time to buy some chic ASX shares

Women’s fashion merchant City Chic Collective Ltd (ASX: CCX) is another buy for Weick.

“This business has transformed itself into a global plus-size retailer,” he said.

“If you have a look at what’s happening in the US at the moment, the volumes across the websites are significantly accelerating. And we think that’s a strong lead indicator.” 

City Chic shares have surged by more than 60% for the year so far.

A week ago, they shot up more than 5% within a day after the company gave a positive update.

“The company [has] done a great job in terms of expanding their marketplace strategy recently, rolling out on the likes of Target Corporation (NYSE: TGT), Amazon.com Inc (NASDAQ: AMZN) and Wallmart Inc (NYSE: WMT),” said Weick.

“We think that aspect of the business is underappreciated.”

The traffic is already bad in Sydney

For something different to shoes and clothing, analyst Anna Milne picked petrol retailer Ampol Ltd (ASX: ALD) as a “good buy” right now.

“We think as NSW and Victoria reopen, there’s going to be an increase in retail fuel volumes and jet fuel volumes as we get on planes more.”

Milne’s team also likes the outlook of Ampol’s takeover of Z Energy Ltd (ASX: ZEL).

“Great New Zealand company. It is strategically sound and is mostly debt-funded — so very accretive on earnings and free cash flow basis.” 

Ampol shares have spiked up about 17% over the past couple of months.

The post 3 retail ASX shares to buy right now: experts appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo owns shares of Amazon. 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 Accent Group and Amazon. 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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Investors that are interested in boosting their income portfolio with some dividend shares might want to look at the ones listed below.

Here’s what you need to know about these top dividend shares:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

ANZ could be a dividend share to buy if you’re looking for exposure to the banking sector following recent weakness.

The team at Macquarie is very positive on the bank due to its strong position in commercial banking. Its analysts prefer this side of banking right now over retail banking due to the latter being impacted by aggressive competition for mortgages, which is weighing heavily on net interest margins.

Macquarie currently has an outperform rating and $30.00 price target on the bank’s shares. This compares favourably to the current ANZ share price of $27.27.

In addition, the broker is forecasting a 145 cents per share dividend in FY 2022 and a 150 cents per share dividend in FY 2023. This equates to yields of 5.3% and 5.5%, respectively, over the next two years.

Coles Group Ltd (ASX: COL)

Another ASX dividend share to look at is Coles. It is one of Australia’s largest retailers with over 800 supermarkets, over 900 liquor retail stores, and over 700 Coles express stores.

Despite its size, the company still has plenty of room for growth in the coming years. It is also focusing on becoming more efficient and growing its online business by constructing new smart distribution centres with automation giant Ocado. All in all, this is expected to underpin solid earnings and dividend growth over the 2020s.

Citi is a fan of the supermarket giant. The broker recently upgraded its shares to a buy rating with a $19.60 price target. This compares to the latest Coles share price of $18.22.

As for dividends, the broker is forecasting fully franked dividends of 64.5 cents per share in FY 2022 and 71.5 cents per share in FY 2023. This will mean yields of 3.5% and 3.9%, respectively.

The post 2 ASX dividend shares with attractive yields to buy appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to buy today
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• Is it a buy? Here’s what top brokers think about the ANZ (ASX:ANZ) share price
• Why is the NAB (ASX:NAB) share price outperforming the other big banks over the past month?

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 owns shares of 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 Bruce Jackson.

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The Bank of Queensland Limited (ASX: BOQ) share price has upside of around 30% according to one broker.

Brokers and analysts are always on the lookout for ASX share opportunities that could be at a good price.

Sometimes investors will think that blue chips are materially undervalued to what their true value is.

One broker thinks that challenger bank BOQ’s share price is noticeably undervalued.

BOQ share price target

Morgans has a price target of $10.80 on BOQ. That means the broker thinks BOQ shares could rise by around 34% over the next year.

The current rating from Morgans is obviously a ‘buy’ with that price target.

Various factors have been considered when thinking about that price target. The cash profit wasn’t quite as strong as the broker had been expecting, the net credit loss provision in the second half was less than Morgans expected.

The broker noted that the bank is expecting the net interest margin (NIM) to decline – just like most banks are – but BOQ is hoping that the growth of its loans will be stronger that the overall loan system.

Outlook

A key aspect of an investor’s thoughts on the BOQ share price may include the company’s own thoughts.

After delivering 51% growth of cash earnings per share (EPS), BOQ said that it’s focused on achieving sustainable profitable growth. In FY22 it’s expecting at least 2% ‘jaws’, driven by faster-than-the-system growth from its BOQ and Virgin Money brands, and by returning ME Bank to around system growth by the year end.

As noted by Morgans, the bank is expecting the NIM to decline by between 5 basis points to 7 basis points in FY22, with competition continuing and the ongoing low interest rate environment.

Expenses are expected to grow by 3% on an underlying basis to support business growth, which will be offset by accelerated integration synergies. When BOQ acquired ME Bank, it said that it was expecting annualised pre-tax synergies of between $70 million to $80 million. Including those synergies the acquisition was expected to add to cash EPS in the low double digit to mid-teens in the first year (FY22).

BOQ recently said that the integration of ME Bank is well progressed and it’s continuing to execute against its strategic transformation roadmap. A key part of the strategy is being a strong digital bank for customers.

Valuation and BOQ dividend

For readers wondering what the actual BOQ share price valuation is, Morgans has provided an indication with its projections.

Based on the profit forecast, BOQ shares are valued at 10x FY22’s estimated earnings and 9x FY23’s estimated earnings.

The broker is also expecting a growing dividend from the challenger bank. In FY22, the grossed-up dividend yield could be 8.7% and the FY23 grossed-up dividend yield is projected to be 9.7%.

The post Here’s why Morgans tips 30% upside for the Bank of Queensland (ASX:BOQ) share price appeared first on The Motley Fool Australia.

More reading

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• 2 ASX dividend shares to buy this month: experts
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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 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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On Tuesday, the S&P/ASX 200 Index (ASX: XJO) was back on form and stormed higher. The benchmark index rose 0.7% to 7,410.6 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to give back some of yesterday’s gains on Wednesday. According to the latest SPI futures, the ASX 200 is expected to open the day 18 points or 0.25% lower this morning. In late trade in the United States, the Dow Jones is up 0.3%, but the S&P 500 is down 0.3% and the Nasdaq is trading 1.3% lower.

Webjet half year results

The Webjet Limited (ASX: WEB) share price will be on watch when it releases its half year results this morning. For the six months ending 30 September, Goldman Sachs is forecasting a 611% increase in total transaction value (TTV) to $668.6 million, revenue of $52.5 million, an EBITDA loss of $13.4 million, and a net loss after tax of $35.5 million.

Oil prices jump

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could have a strong day after oil prices jumped. According to Bloomberg, the WTI crude oil price is up 2.4% to US$78.60 a barrel and the Brent crude oil price has risen 3.3% to US$82.37 a barrel. This is despite the US revealing that it will release oil from reserves to combat rising energy prices.

Gold price falls

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a difficult day after the gold price dropped. According to CNBC, the spot gold price is down 1% to US$1,788.80 an ounce. The gold price hit a three-week low after rate hike bets increased.

AGMs

Annual general meeting season continues on Wednesday. Among the companies holding annual general meetings are retail giant Harvey Norman Holdings Limited (ASX: HVN) and private hospital operator Ramsay Health Care Limited (ASX: RHC). Both ASX 200 shares could provide updates at their respective events.

The post 5 things to watch on the ASX 200 on Wednesday appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• BHP (ASX:BHP) share price jumps 4% on ‘global energy company’ deal
• 2 high-yielding ASX 200 dividend shares
• Why ASX shares are still good value: fund manager
• Woodside (ASX:WPL) share price climbing as megadeals signed off

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 owns shares of and has recommended Harvey Norman Holdings Ltd. The Motley Fool Australia has recommended Ramsay Health Care 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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