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The Glasgow Climate Summit has now kicked off, with the Australian government only just signing off on a 2050 net-zero target to take to the conference.

If you think green energy is inevitable as the world tries to slow man-made climate change, there is one ASX share that a trio of experts has nominated as a cheap way of gaining exposure.

And it’s a stock that, at face value, is not obvious as a “green” investment.

According to Wilson Asset Management portfolio managers Catriona Burns, Matthew Haupt, and Oscar Oberg, their WAM Leaders Ltd (ASX: WLE) portfolio currently holds South32 Ltd (ASX: S32) shares.

South32 is a Perth mining company that extracts a variety of metals in locations around the world.

A mining company as a green investment?

A recent transaction by this ASX share piqued the interest of the Wilson team.

“Recently, South32 announced the acquisition of a 45% interest in the Sierra Gorda copper mine in Antofagasta, Chile,” the portfolio managers said in a memo to clients.

“Antofagasta is known as one of the largest international copper mining regions, with prime access to people, suppliers, and infrastructure. 90% of the power requirements of the region are generated from renewable energy sources.”

South32 has published a strategy to reshape its investments for a low-carbon future. Burns, Haupt, and Oberg said the Chile buyout fits into this narrative.

“Following completion, over 40% of South32’s earnings will come from base and precious metals, which are experiencing unprecedented demand from electric vehicles and renewable power, infrastructure, transmission, and storage,” they said.

“Over 35% of earnings will be attributed to the aluminium value chain, which is a lightweight metal used for electric vehicles and construction.” 

They added that close to 20% of earnings will be from manganese, which is “required for steel production and recycling, with emerging demand in electric vehicles”. 

“The balance (less than 5%) will be from metallurgical coal which is required to support emissions reduction targets in the steel sector.”

The acquisition makes financial sense too

The Antofagasta buyout also makes financial sense for the ASX share, according to the Wilson team.

“The transaction is expected to be immediately earnings accretive for South32 and consideration paid was at a discount valuation to both South32 and comparable pure-play copper peers.”

South32 shares also provide a reliable dividend income, and the portfolio managers remain bullish on them.

“South 32… has a strong balance sheet and is an inexpensive way of gaining exposure to the green energy transition.”

The South32 share price has gained more than 44% this year so far and closed on Friday at $3.57, down 0.28% on the day.

The post This ASX share is a ‘cheap’ way to invest in green energy transition appeared first on The Motley Fool Australia.

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• 2 excellent ASX dividend shares rated as buys
• These 3 ASX 200 shares are topping the volume charts on Wednesday
• Could the South32 (ASX:S32) share price reach $4.50 by Christmas?

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 National Australia Bank Ltd (ASX: NAB) share price was a strong performer in October.

What happened to the NAB share price in October?

During October, the banking giant’s shares hit a new 52-week high of $29.45 before ultimately ending the month at $28.71.

This means the NAB share price rose approximately 3.2% during the period, which compares favourably to the S&P/ASX 200 Index (ASX: XJO). The benchmark index ended the month slightly lower than where it started it.

Why did its shares outperform?

Investors were bidding the NAB share price higher last month despite there being no major news out of it.

However, the bank was the subject of a bullish note out of Goldman Sachs last month.

According to the note, ahead of the company’s full year results release, the broker retained its conviction buy rating and lifted its price target to $30.84.

Based on the current NAB share price, this implies potential upside of 7.8% for investors.

And with Goldman forecasting a $1.44 per share fully franked dividend in FY 2022, the total potential return stretches to almost 13%.

What did the broker say?

Goldman is positive on the NAB share price for a number of reasons. This includes its cost management initiatives and its margin management.

The broker explained: “Our preference for NAB (Buy, on CL) is premised on i) NAB’s cost management initiatives, which seem further progressed relative to most of its peers and should drive productivity benefits sooner and free up investment spend to be directed more towards customer experience, as opposed to infrastructure; ii) given NAB’s position as the largest business bank and investment in its mortgage capability, we believe it is strongly positioned to benefit from the current recovery in both housing and commercial volumes; iii) NAB continues to effectively manage the balance between volumes and margins.”

Shareholders will no doubt be hoping for more of the same in November.

The post How did the NAB (ASX:NAB) share price perform in October? appeared first on The Motley Fool Australia.

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• Can the Macquarie (ASX:MQG) share price break new highs over $200?
• ASX 200 (ASX:XJO) midday update: Macquarie doubles profit, ResMed jumps
• NAB (ASX:NAB) share price lower following director announcement
• NAB (ASX:NAB) share price hits 2-year high, CEO welcomes net zero commitment
• The NAB (ASX:NAB) share price is outperforming its rivals this month: Is it a buy?

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 Seven West Media Ltd (ASX: SWM) share price is climbing higher on Monday after announcing the acquisition of Prime Media Group Limited (ASX: PRT).

At the time of writing, shares in the media company are swapping hands for 50 cents apiece, up 9.9%. As a result, the company’s share price is now 18.6% away from its 52-week high.

Let’s take a look at the latest price moving announcement.

What’s moving the Seven West Media share price today?

Investors are getting excited about Seven West Media on Monday as the company looks set to expand its media presence through an acquisition. The entity being acquired is the Australian-based and fellow ASX-listed media corporation, Prime Media Group.

According to the release, Seven West is acquiring Prime Television, Seven Affiliate Sales, and all its subsidiaries. At present, Prime operates the regional television network Prime7 in eastern Australia and GWN7 in regional Western Australia.

In turn, Seven West believes the acquisition will create a broadcasting, video, and news powerhouse — reaching more than 90% of the Australian population every month.

Furthermore, the bid for Prime Media’s business values it at $131.9 million. Based on the current number of shares on issue, this equates to 36 cents a share. Meanwhile, Prime Media was going for 23 cents per share at the end of Friday.

Unsurprisingly, shares in Prime Media have skyrocketed today on the significantly higher offering. At the time of writing, they are trading 69.57% higher at 39 cents a share.

Seven West shareholders will likely be distributed cash on the balance sheet of the acquired companies. Moreover, this spare cash is expected to be in the realm of $10 million from Prime and its various subsidiaries.

Additionally, accounting for the cash and share of distributions, Seven Media’s net investment is expected to be roughly $72 million. This would suggest a payment 2.9 times enterprise value to FY21 earnings before interest, tax, depreciation, and amortisation (EBITDA) for the acquisition.

Management commentary

Commenting on the acquisition, Seven West Media CEO James Warburton stated:

This proposal is an important step forward for both companies. SWM and PRT are great partners and have a long, successful relationship. Together, they will offer the best content for our national audience and unmatchable premium revenue opportunities for our clients.

The proposed transaction is an exciting and transformative development for advertisers and media buyers. It means we will be able to give advertisers easy and seamless access via a single platform to capital city and regional markets.

The market is showing enthusiasm for the Seven West Media share price with cost synergies expected. In fact, an estimated $5 million to $10 million cost synergies are anticipated on an annualised basis. These are forecast to be realised within 12 to 18 months from the acquisition completion.

Finally, the Seven West Media share price is up 196% in the last year.

The post Seven West (ASX:SWM) share price lifts 10% amid Prime Media acquisition appeared first on The Motley Fool Australia.

More reading

• What’s sending the Seven West Media (ASX:SWM) share price up 6% on Friday?

Motley Fool contributor Mitchell Lawler 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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At lunch on Monday, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a solid gain. The benchmark index is currently up 0.55% to 7,364.8 points.

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

Westpac full year results disappoint

The Westpac Banking Corp (ASX: WBC) share price is sinking on Monday following the release of its full year results. Although the banking giant doubled its cash earnings in FY 2021, this was still a touch short of expectations. In addition, Australia’s oldest bank announced a $3.5 billion off-market share buyback. A note out of Morgans reveals that its analysts were forecasting a $5 billion buyback

Macquarie share price returns

The Macquarie Group Ltd (ASX: MQG) share price has returned from its trading halt and is edging lower. The investment bank’s shares returned to trade today after completing a $1.5 billion institutional placement. These funds were raised at $194.00 per new share, which represents a discount of just 1.9%. The new capital provides Macquarie “with additional flexibility to invest in new opportunities where the expected risk-adjusted returns are attractive.”

Ausnet accepts Brookfield offer

The Ausnet Services Ltd (ASX: AST) share price is storming higher today after accepting a takeover offer from Brookfield Asset Management. According to the release, Brookfield has tabled a binding proposal of $2.65 per share, which is up from its original offer of $2.50 per share. As part of the terms of the agreement, Ausnet has terminated its due diligence process with APA Group (ASX: APA).

Best and worst ASX 200 performers

The best performer on the ASX 200 on Monday has been the Codan Limited (ASX: CDA) share price with a 6% gain. This appears to have been driven by bargain hunters swooping in after its shares were sold off last week. The worst performer has been the Westpac share price with a 6% decline following its full year results release.

The post ASX 200 (ASX:XJO) midday update: Westpac sinks, Macquarie raises $1.5bn appeared first on The Motley Fool Australia.

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• Can the Macquarie (ASX:MQG) share price break new highs over $200?
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• Ausnet (ASX:AST) share price jumps as Brookfield offers $2.65/share
• Macquarie (ASX:MQG) share price falls after completing $1.5bn capital raising
• These were the worst performing ASX 200 shares in October

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. 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 APA Group and Macquarie 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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The Macquarie Group Ltd (ASX: MQG) share price may be retreating from its record high, but it might be only a matter of time before it resets new records, according to a top broker.

Shares in the investment bank fell 1.8% to $194.14 in morning trade as ASX bank shares tumbled. The Westpac Banking Corp (ASX: WBC) share price crashed 6.3% to $24.07 after it released disappointing results and that has dragged on sentiment towards the sector.

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price and National Australia Bank Ltd. (ASX: NAB) share price are also trading in the red.

In contrast, the S&P/ASX 200 Index (Index:^AXJO) is trading 0.4% higher at the time of writing.

Buy the Macquarie share price on dips

But the weakness in the Macquarie share price may not last. Citigroup reckons its shares are good value as it upgraded the ASX shares to “buy” from “neutral”.

The broker’s bullish change of heart comes on the back of Macquarie’s results last week. The bank’s first half net profit of just over $2 billion was about 6% ahead of consensus.

Citi noted that this is the fourth consecutive quarter where management has posted an average of at least $1 billion in net profit.

Strong earnings track record and potential upgrades

“Prior to COVID, Macquarie has only achieved this level once throughout its 50-year history,” said the broker.

“The unprecedented market conditions for asset sellers, combined with most serious energy crisis since the 1991 Gulf war, should enable Macquarie to continue this streak for at least the next two quarters.”

This means further consensus upgrades could be on the cards for the Macquarie share price.

Don’t fret about rising rates

Expectations that interest rates will rise sooner than expected will be a headwind for bank earnings. But this negative is expected to be more than offset by volatile commodity prices.

“The upgrade to guidance since the recent AGM suggests that MQG is well placed to be a material beneficiary of an evolving energy crisis,” added Citi.

“Business capital deployed into CGM is supportive of increased trading activity and a more sustainable revenue platform, of which commodities is a key driver that we expect will peak at $2.8bn in FY22 but roll off to a higher base.”

Further, the increase in equity investments also bodes well for the Macquarie share price. This is because that is tipped to boost its earnings over the medium term.

What is the Macquarie share price worth?

“We have upgraded our earnings forecasts by ~17% in FY22E and an average ~10% in FY23-24E,” said Citi.

“CGM and MacCap make up the majority of our revisions, with best divisions set to benefit from increased activity levels.”

Citi increased its 12-month price target on the Macquarie share price to $226 from $200 a share.

The post Can the Macquarie (ASX:MQG) share price break new highs over $200? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Westpac sinks, Macquarie raises $1.5bn
• Westpac (ASX:WBC) share price sinks 6% despite doubling cash earnings
• Macquarie (ASX:MQG) share price falls after completing $1.5bn capital raising
• These were the worst performing ASX 200 shares in October
• These were the best performing ASX 200 shares in October

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Macquarie Group Limited, National Australia Bank Limited, and Westpac Banking Corporation. 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 Macquarie 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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The Webjet Ltd (ASX: WEB) share price moved in circles for most of last month. Indeed, it was a disappointing finish considering its shares touched a 52-week high of $6.89 on 4 October.

Investors appear to have mixed feelings when it comes to deciding the value of Webjet shares in the current climate. This is despite Australia opening its international borders to a number of countries today. The federal government suspended all non-essential travel from March 2020 when COVID-19 took the world by storm.

At the time of writing, the online travel agent’s shares are up 2.85% to $6.50.

What’s weighing down Webjet shares lately?

A catalyst for Webjet shares tracking lower last month could be the resurgence of COVID-19 cases in Australia.

As the super-infectious delta variant spreads through communities, state borders continued to be closed. Before COVID-19, the Sydney to Melbourne route was considered as the third busiest route in the entire world.

While some international routes have restarted, Webjet will be hoping for a speedy recovery.

No doubt, this will have a positive effect on the company which has been in hibernation mode since early last year. Although, Webjet still has substantial cash reserves to survive the ongoing crisis that has put the travel industry in a tailspin.

In its FY21 results released on 19 May, the company had a strong capital position at hand. Pro forma cash stood at $431 million with an average cash burn rate of around $5.5 million per month. This gives Webjet the ability to weather the unpredictable nature of COVID-19 for the next 6.5 years without having to raise additional capital.

However, a trading update released in late August revealed that Webjet will become cash flow positive for the first-half of FY22. This excludes investing and debt repayments.

In addition, the company highlighted that its WebBeds business has been profitable since July 2021. It’s a positive sign that recovery is not far off, particularly given Australia’s accelerated vaccination program.

All eyes will be on Webjet’s H1 FY22 results which will be released on 25 November 2021.

Webjet share price summary

In the last 12 months, Webjet shares have gained more than 86% since hitting near COVID-19 lows in October 2020. The company has gradually been moving on an upward trend but its share price is still a long way off pre-pandemic levels.

On valuation grounds, Webjet has a market capitalisation of around $2.47 billion with approximately 379 million shares on issue.

The post Why has October been such a lousy month for the Webjet (ASX:WEB) share price? 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 owns shares of and 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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Shares in Australian biotechnology giant CSL Limited (ASX: CSL) are on the move today amid a heating battle between the company and the US Border Patrol.

At the time of writing, CSL shares are changing hands at $304.61 apiece, which is just under a 2% gain from the open.

CSL has filed an injunction against the US Customs and Border Protection agency after the latter instated new rules governing the mobility of Mexican citizens into the US to donate plasma earlier in the year.

Here we cover the central points of the debate between the two parties.

What has led us to this point?

In June, the US Customers and Border Protection agency declared that certain visa holders are ineligible to donate plasma if they receive payment for doing so.

The agency claims that donating plasma in this fashion is akin to ‘labour for hire’ and is therefore prohibited for individuals on B-1 and/or B-2 visas – the particular category in question.

CSL has since fired back, teaming up with Spanish pharmaceuticals manufacturer Grifols SA (BME: GRF) in filing an injunction against the agency, effectively for interrupting the biotech’s ongoing business.

From its annual earnings report, plasma collection and separation accounted for roughly 85% of CSL’s earnings in FY21, well ahead of its vaccines and antivenom segments.

Furthermore, the industry is reliant on Mexican nationals entering the US to make plasma donations, with some estimates stating this accounts for 5–10% of all global plasma collections.

It, therefore, stands to reason that any impact to this flow of blood plasma collection could pose a material threat to CSL’s earnings potential, as it also relies heavily on plasma as a raw ingredient to construct its unique formulations.

In its defence, the US agency responded by stating there has never been a policy in situ that governs the mobility of Mexican citizens into and out of the US to donate plasma.

And even though CSL argues that receiving payment after donating plasma signifies ‘international business activity’ rather than the performance of labour, the US agency thinks otherwise.

It reckons that because the transactions take place only in the US, they cannot be considered an international business activity, which is a defining feature of the visas in question.

Nonetheless, CSL is of the firm belief that an ongoing shutdown to its plasma collection in this route could be detrimental to its business, hence why it has filed the lawsuit alongside Grifols.

The biotech’s CEO Paul Perreault was quoted as saying that “It is a bold move, but you know I don’t mind putting my neck out when patients are waiting” in the company’s annual report last month.

As the injunction was heard only last week or so, investors are still awaiting the outcome of any decision from US authorities regarding the matter.

CSL share price snapshot

It’s been a difficult year for CSL and its share price this year, having posted a gain of just 7.5% since January 1.

Over the past 12 months, it has climbed around 6%, a step in behind the benchmark S&P/ASX 200 index (ASX: XJO)’s return of around 25% in that time.

The post CSL (ASX:CSL) share price lifts 2% amid US Border Patrol battle appeared first on The Motley Fool Australia.

More reading

• Own CSL shares? Here’s how the company actually makes money
• Top ASX shares to buy in November 2021
• CSL (ASX:CSL) share price history: The major highlights (and low points)
• What Goldman Sachs is saying about the CSL (ASX:CSL) share price after its R&D update
• The CSL (ASX:CSL) share price is up just 3% so far in 2021. Here’s why

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of 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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The Telstra Corporation Ltd (ASX: TLS) share price has started the week on a positive note.

At the time of writing, the telco giant’s shares are up 1.5% to $3.88.

This latest gain means Telstra’s shares are now up approximately 29% in 2021.

Can the Telstra share price keep rising?

The good news for investors is that it may not be too late to buy the telco’s shares.

This is because one leading broker still sees plenty of upside for the Telstra share price over the next 12 months.

A recent note out of Morgans reveals that its analysts have retained their add rating and lifted their price target on the company’s shares to $4.55.

Based on the current Telstra share price, this implies potential upside of 17% for investors before dividends. This increases to just over 21% if you include the 16 cents per share dividend Morgans is forecasting in FY 2022.

Four reasons Telstra could be a buy

Morgans is positive on the Telstra share price for four key reasons.

The first, it explained, is: “Industry dynamics have turned positive (NBN and mobile prices are increasing after 5 years of decline; TLS’s targets imply they continue to rise).”

“The SOTP [sum of the parts] for TLS is worth more than the current share price (and steps to release this value are underway; albeit timing is unclear),” Morgans reveals as another reason.

The broker is also positive on the recent deal with the Federal Government to acquire the Digicel Pacific business.

It commented: “While PNG is not without risk, this deal shows management’s ability to sensibly manage risk, and it could create further upside, all going to plan.”

The final reason Morgans is bullish on the Telstra share price is its growth outlook. After years of earnings declines, the broker notes that Telstra is well-placed for growth in the coming years.

“Underlying earnings returned to growth in 2H21 and should continue growing out to FY25,” it concluded.

All in all, this could make Telstra worth considering in November.

The post 4 reasons the Telstra (ASX:TLS) share price could be in the buy zone 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 owns shares of and has recommended Telstra Corporation 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 a long-term investor, it is incredibly important to see companies, such as CSL Limited (ASX: CSL), and its shares, as more than flickering ticker codes with an erratic dollar value. Instead, these listed entities are collections of people with a shared mission.

Part of what makes a company valuable is its mission and what it does to work towards that goal. That being said, it can be easy to lose sight of what a company does that provides shareholders with a return. Even for a company with the stature of CSL, Australia’s second-largest listed company by market capitalisation, understanding the money-making business activity can be lost in the pile of information.

For this reason, we’ll be diving into how CSL shares actually earn their keep in the present day.

How does CSL make money?

Although CSL isn’t quite a ‘household’ name, its products have touched the lives of many people. The company’s roots stem all the way from 1916 when it was known as Commonwealth Serum Laboratories, an Australian government-owned entity involved in vaccine manufacture.

While its history is extensive and incredibly interesting, spattered with a long list of monumental breakthroughs in modern medicine, we are here to cover how the CSL we know today makes money.

The publically-listed and privatised version of CSL that Aussies invest in these days has two distinct business operations. These two businesses include CSL Behring and Seqirus.

Firstly, CSL Behring is a provider of medicines to treat people with rare and serious diseases. These treatments are across multiple areas of immunology, haematology, cardiovascular, and transplant therapeutics. In terms of how much money the Behring business ‘Beh-rings’ in, it is more than 80% of the company’s US$10.3 billion of annual revenue. This is derived through the sale of its broad range of products including tetanus shots, coagulants, etc. to more than 100 countries.

Secondly, the Seqirus side of CSL’s operations is focused on influenza vaccines. In fact, Seqirus is one of the leading providers of ‘flu shots in the world. However, investors in CSL shares mightn’t know it manufactures a unique range of products made in the national interest. These products include antivenoms and Q fever vaccines.

In FY21, Seqirus pulled in total revenue of $1.736 billion, an increase of 30% year on year. This was due to the strong demand for CSL’s influenza vaccines to reduce strain on hospitals during COVID-19.

How have CSL shares performed?

The CSL share price has been a solid performer over long time periods. For example, in the last five years, the CSL share price has gained 208%. This represents a compound annual growth rate (CAGR) of 25.28%, which far outpaces the S&P/ASX 200 Index (ASX: XJO) CAGR of 7.22% in the last five years.

However, CSL returns have been more modest over the past 12 months. In the last year, the CSL share price has climbed 6.18% higher, significantly lower than its historical performance.

The post Own CSL shares? Here’s how the company actually makes money appeared first on The Motley Fool Australia.

More reading

• Top ASX shares to buy in November 2021
• CSL (ASX:CSL) share price history: The major highlights (and low points)
• What Goldman Sachs is saying about the CSL (ASX:CSL) share price after its R&D update
• The CSL (ASX:CSL) share price is up just 3% so far in 2021. Here’s why
• ASX 200 (ASX:XJO) midday update: BHP’s Q1 update, CSL’S R&D update

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of 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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The Westpac Banking Corp (ASX: WBC) share price has come under significant pressure on Monday.

In morning trade, the banking giant’s shares are down over 6% to $24.10.

Why is the Westpac share price sinking?

Investors have been selling down the Westpac share price today after its full year results fell short of expectations.

In case you missed it, Australia’s oldest bank reported a 138% increase in statutory net profit to $5,458 million and a 105% jump in cash earnings to $5,352 million. This allowed Westpac to declare a fully franked final dividend of 60 cents per share and announce a $3.5 billion off-market share buyback.

However, despite its cash earnings doubling in FY 2021, it was still short of the consensus estimate of $5.42 billion.

What else?

Also falling short of expectations and weighing on the Westpac share price was its off-market share buyback. While Westpac announced a significant $3.5 billion buyback, it was lower than the market was forecasting.

The team at Morgans, for example, were expecting Westpac to announce a buyback of $5 billion with its results, whereas Goldman Sachs was forecasting a $4 billion share buyback.

Goldman also notes that the bank’s expenses and net interest margin (NIM) were disappointing.

It commented: “WBC’s 2H21 NIM was down 10 bp hoh to 1.99% (1.98% ex notables) and was lower than our expectations (GSe, -6 bp to 2.03%).”

“On outlook, WBC notes that FY22 Margins are expected to be lower and highlighted exit margin ex. treasury & markets at 1.80% (1.87% Sep-21 half average),” the broker added.

As for expenses, Goldman said: “WBC 2H21 reported expenses were up 22% hoh, 5% higher than GSe. Excluding notable items, 2H21 expenses were up 9% hoh. WBC attributes most of the increase to higher staff expenses (+18%, +14% ex notables) due to the additional 1,396 FTE over the half on higher resourcing needs to improve risk management and compliance and to support customers impacted by hardship.”

All in all, a disappointing result from the banking giant.

One positive, though, is that the Westpac share price is still up 23% in 2021 despite today’s weakness.

The post Westpac (ASX:WBC) share price sinks 6% despite doubling cash earnings appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. 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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