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The Silver Mines Limited (ASX: SVL) share price is gaining ground this afternoon, currently up 7.3% at 22 cents.

There’s no price-sensitive information out of the precious metals company’s camp today. Therefore, it’s worthwhile considering what forces may or may not be influencing its price action.

Why is the Silver Mines share price charging higher?

In the absence of any market-sensitive information today, we have to examine what’s happening in the underlying commodity markets.

Given the company is basically a silver pure-play, it’s wise to see what’s been happening with gold’s grey cousin lately.

After a strong rally in calendar year 2020, silver pricing has been volatile lately and largely traded sideways until June. After that, it started marching down the steps to hit a new low of US$21.513/t.oz on 29 September.

From then silver pricing has made a sharp recovery and is charging back northwards with authority.

In the two-or-so weeks since the move in silver began, it has climbed 13.5% to now trade at US$24.41/t.oz. It’s showing no signs of slowing down either, with another 0.6% gain so far today.

As long-lasting inflation poses a threat to the global economy, investors tend to flock to asset classes that offer safety and act as a hedge against inflation.

In this “flight to quality” as it is known, investors tend to gain exposure to commodity classes such as precious metals. These have proven to be reasonable and effective protection against currency debasement and asset price inflation over time when included in one’s portfolio.

What else could be at play?

Silver Mines is an ASX resources share that produces a commodity – in this case silver – and therefore, it is considered a price taker on the metal.

That means it must accept the going prices in the markets it sells into, which are often dictated by the unseen hands of supply and demand (among others).

As such, its share price can and does fluctuate with volatility in the broader commodity markets. So, when silver pricing begins to break out or crash, we can expect similar activity in the Silver Lake share price.

The correlation/causation effect is more apparent when examining the price history of both assets. We can see they move largely in unison, with the precious metal leading the Silver Mines share price.

And also given silver has hit new highs each day of this week, including today, it stands to reason this correlation effect has spilled over into Silver Mines’ hemisphere.

Silver Mines share price snapshot

The Silver Mines share price has struggled this year to date, despite strengths in its underlying markets. It has posted a loss of 6.5% since January 1 and is trading flat to its share price 1-year ago.

These results have each lagged the S&P/ASX 200 index (ASXL: XJO)’s return of around 19% in the same time.

The post Why is the Silver Mines (ASX:SVL) share price climbing 7% on Thursday? appeared first on The Motley Fool Australia.

More reading

• Perpetual (ASX:PPT) share price jumps 8% on positive quarterly update
• ASX 200 energy shares take a breather, broker sees “lot of upside risk” for oil
• Enero (ASX:EGG) share price leaps 22% to 52-week high. Here’s why
• These 3 ASX 200 shares are topping the volume charts on Thursday
• NAB (ASX:NAB) share price nudges 2-year, post-COVID high

The author Zach Bristow has no positions 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 Perpetual Ltd (ASX: PPT) share price is gaining solid ground since Monday, having come off a low of $37.07 to start trading this week.

At the time of writing, shares in the financial services giant are currently swapping hands up around 8% at $40.36 apiece.

Perpetual shares are on the move as the company released its quarterly business update for the quarter ended 30 September 2021.

Perpetual share price hikes as assets under management swell

Key investment highlights from Perpetual’s quarterly results include:

• Perpetual’s total Assets under Management (AUM) was A$101.0 billion1 as at 30 September 2021, up 2.7% on the prior period, with positive net flows of $0.1 billion.
• Perpetual Asset Management International’s (PAMI) AUM was A$75.5 billion, up 2.6%
• Perpetual Asset Management Australia’s (PAMA) AUM was A$25.5 billion, up 3%
• Perpetual Corporate Trust’s (PCT) Funds under Administration (FUA) of A$964.4 billion, up 5%
• Perpetual Private Funds under Advice (FUA) of A$18.5 billion, up 9%

What happened this quarter for Perpetual?

Perpetual continues to grow its AUM on a sequential basis, with another roughly 3% gain on the prior quarter to $101 billion.

This trend was carried through each of the company’s business segments, with each section of its portfolio experiencing a net gain.

The company also appeared pleased with the performance of its recent acquisition Triullium, with its AUM now standing at $8.3 billion, a substantial 48% growth in asset value since the transaction was completed.

Aside from this, Perpetual’s other recent acquisition, Barrow Hanley, is due to announce its plan to launch its first collateralised loan obligation (CLO) fund later this year.

The tuck-in of Barrow Hanley has resulted in a “material improvement in the overall (fund) flow profile, particularly in (its) equities strategies, which saw net inflows of $500 million”.

Alongside these cost synergies from its recent acquisitions, company’s core business segments continued to display strengths this quarter.

PAMI grew its AUM by around 3% from the previous quarter, with the bolus of this growth underscored by positive foreign exchange impacts of $2.9 billion and inflows of $1.5 billion into its ‘Global Equities strategies’.

Meanwhile, the Australian arm of its asset management segment also expanded its AUM by 3% across the quarter, underlined by “positive investment markets and positive relative investment performance”.

Perpetual also received two awards in this segment, in addition to receiving the Zenith Fund Manager of the Year Award for 2021.

The company’s “Diversified Real Return Fund” won the Multi Asset Real Return award for the third year in a row, whereas its Perpetual Share Plus Long Short Fund crowned the Australian Equities Alternative Strategies category.

Investors appear impressed by the wealth of progress the fund manager has made this quarter, and are pushing up the Perpetual share price on a volume 37% higher than its 4-week average trading volume.

What did management say?

Presumably satisfied with the company’s results this year, Perpetual CEO and Managing Director, Rob Adams said:

Our asset management teams have delivered strong performance during the quarter, with another period of outperformance across the majority of our investment capabilities. It was pleasing to see that the combination of our Australian and International asset management businesses experienced positive net flows for the quarter.

Regarding the accolades Perpetual earned this year, Adams added:

As a reflection of the strong performance for our clients during the 2021 financial year, Perpetual Asset Management Australia (PAMA) was recently awarded the Zenith Fund Manager of the Year award for 2021. We are extremely proud of this award, which recognises the strong relative investment performance across PAMA’s capabilities.

What’s next for Perpetual?

The company gave some colour on its updated expense guidance, following an International Financial Reporting Standards Interpretations Committee (IFRIC) assessment of how the company was capitalising the expenditure around its cloud computing arrangements.

This was previously announced in the company’s FY21 results, however, the company advised today the assessment is now complete.

As a result, “significant items relating to integration costs will increase slightly”, which means the company had to update items on its expenditure modelling.

Perpetual also completed the acquisition of Laminar Capital on 5 October. Combined, these new expenditures result in an updated change to significant items to $42–$47 million, per the release.

Consequently, as per Perpetual, guidance will move from 2–4% to 3–5%, with Laminar’s earnings showing accretion to the company’s bottom line from FY22.

Perpetual shares have climbed 16% this year to date, having posted a return of 35% in the past 12 months.

The post Perpetual (ASX:PPT) share price jumps 8% on positive quarterly update appeared first on The Motley Fool Australia.

More reading

• Perpetual (ASX:PPT) share price hits 4-month low following acquisition news
• 5 things to watch on the ASX 200 on Friday

The author Zach Bristow has no positions 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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S&P/ASX 200 Index (ASX: XJO) energy shares have pulled back in recent trading sessions despite oil prices continuing to advance.

The S&P/ASX Energy (INDEXASX: XEJ) index has slipped 0.95% in the last five trading days, weighed down by losses from heavyweights Woodside Petroleum Limited (ASX: WPL), Santos Ltd (ASX: STO) and Oil Search Ltd (ASX: OSH).

In spite of weakness across ASX 200 energy shares, West Texas Intermediate rallied US$2.04 or 2.51% in the past week to US$83.54 a barrel, a 7-year high. The global benchmark, Brent crude, is trading at 3-year highs of US$85.74 a barrel.

Goldman Sachs thinks oil has more legs to run

“Global oil prices could surge well above $90/b by the end of the year unless a current supply deficit amid rebounding energy demand can be reduced in the coming months,” said Jeff Currie, the head of commodity research at Goldman Sachs, as reported by S&P Global.

“This is a big hole to fill even with the production increases that we have penciled in going from now to the end of this year,” Currie said at the India Energy Forum by CERAWeek.

Goldman Sachs previously raised its oil forecasts from US$80/b to US$90/b in late September.

Its 26 September note said:

While we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts.

Currie thinks that oil has more legs to run, playing catch up against other surging energy power and gas prices, as well as other commodities such as copper and aluminium.

“The only reason why oil is lagging these other markets is that it was at the epicenter of the demand hit from COVID … we think it’s just a matter of months until oil joins the ranks of the rest of these commodities,” Currie said.

What does this mean for ASX 200 energy shares?

Surging oil prices have helped push many depressed ASX 200 energy shares into positive year-to-date territory.

It also helped prop up earnings, with Woodside Petroleum’s third quarter update showing a 70% jump in Brent crude oil prices to US$73/b compared to a year ago. This translated to a 19% quarter-on-quarter jump in revenues to $1.53 billion.

The post ASX 200 energy shares take a breather, broker sees “lot of upside risk” for oil appeared first on The Motley Fool Australia.

More reading

• Santos (ASX:STO) share price wobbles despite record quarterly sales revenue
• Woodside (ASX:WPL) share price dips despite quarterly revenue lift
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• This leading fund manager thinks these ASX shares might be buys

Motley Fool contributor Kerry Sun 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 Enero Group Ltd (ASX: EGG) share price has a new 1-year high. The positive price movement comes after the company released a trading update for this financial year.

At the time of writing, shares in the marketing and communications services company are trading for $3.45 – up 11.65%. Earlier today, the Enero share price hit a 52-week high of $3.76, up 21.7% on yesterday’s closing price.

Let’s take a closer look at today’s news.

Enero company profile

Enero Group is a creative technology company operating a global collective of marketing and communications specialist agencies.

Its portfolio includes:

• Digital agency Orchard
• Creative agency BMF
• Brand, marketing and PR comms consultancy Hotwire
• Programmatic marketing platform OBMedia
• Issues management comms advisory CPR
• Strategic data consultancies The Leading Edge and The Digital Edge.

Enero share price up as revenue increases nearly 23%

In its investor presentation, Enero provided the following update:

• In the first quarter of FY22, the company made $45.6 million in net revenue. This is a 22.6% jump on the prior corresponding period (pcp)
• Operating earnings before interest, taxes, depreciation, and amortisation (EBITDA) jumped 50% on the pcp to $14.7 million
• The EBITDA margin increased 5.9 percentage points to 32.2%.

These results are clearly encouraging for investors, at least judging by the rising Enero share price today.

What’s the outlook and is this affecting the Enero share price?

Looking forward, Enero says it continues “to see a strong pipeline of new business opportunities”, especially in the healthcare, technology, and consumer business-to-business markets.

The company goes on to say that inorganic growth continues to be a strong focus for Enero. Inorganic growth is a result of mergers and acquisitions rather than an expanding customer base.

Finally, Enero says ongoing uncertainty relating to COVID-19 may place pressure on the company’s bottom line. Enero cites possible wage growth cost pressures and increasing discretionary travel expenses as borders open up.

Despite these headwinds, the Enero share price is rising today.

Enero share price snapshot

Over the past 12 months, the Enero share price has increased 89.5%. Year to date, shares in the company are up 62%.

Enero has a market capitalisation of approximately $303 million.

The post Enero (ASX:EGG) share price leaps 22% to 52-week high. Here’s why appeared first on The Motley Fool Australia.

More reading

• ASX 200 energy shares take a breather, broker sees “lot of upside risk” for oil
• These 3 ASX 200 shares are topping the volume charts on Thursday
• NAB (ASX:NAB) share price nudges 2-year, post-COVID high
• Pinterest Q3 earnings: Here’s what to look for
• Broker upgrades Nanosonics (ASX:NAB) share price to a buy rating

Motley Fool contributor Marc Sidarous 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 S&P/ASX 200 Index (ASX: XJO) is having another solid and sunny day in the green this Thursday. At the time of writing, the ASX 200 is up a decent 0.16% to 7,426 points. But let’s go further and check out the ASX 200 shares that are currently topping the charts in terms of raw trading volume, according to investing.com.

3 most active ASX 200 shares by volume this Thursday

Whitehaven Coal Ltd (ASX: WHC)

Our first ASX 200 share up today is mining company Whitehaven. Whitehaven has seen a solid 13.19 million of its shares trade on the markets so far today.

As my Fool colleague, Kerry covered this afternoon, this may have something to do with the moves Chinese regulators are making in the country’s energy market, which looks to be weighing on the coal miners’ shares today. Whitehaven shares are presently down 2.3% to $2.98.

Telstra Corporation Ltd (ASX: TLS)

ASX 200 telco Telstra is next up this Thursday. We have seen a hefty 15.22 million Telstra shares swap hands so far today. There are no major news or announcements out of Telstra today that might explain such an elevated trading volume.

However, the Telstra share price has shown some volatility today. It is presently sitting at $3.75 a share, flat for the day so far. However, it dipped down to $3.71 a share this morning after spiking to $3.77 soon after open. It’s probably this volatility that’s behind so many TLS shares trading today.

Alumina Limited (ASX: AWC)

Another ASX 200 resource share rounds out our list today in aluminium producer Alumina. Alumina has had 16.07 million of its shares bought and sold so far this Thursday.

Again, this appears to be the result of some market volatility. Alumina shares are currently down a nasty 1.85% to $2.12 so far today, which is probably behind the elevated trading volume we see with this company.

The post These 3 ASX 200 shares are topping the volume charts on Thursday appeared first on The Motley Fool Australia.

More reading

• Whitehaven Coal (ASX:WHC) share price falls as China intervenes in coal market
• ASX 200 (ASX:XJO) midday update: Aristocrat hits record high, Flight Centre sinks
• 2 top ASX shares with generous fully franked dividend yields
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX shares today

Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation Limited. 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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The National Australia Bank Ltd (ASX: NAB) share price is edging higher this afternoon, currently trading at $28.96.

That’s a shade off its intraday high of $29.08, which is a corresponding 2-year high for the Australian banking giant.

Despite there being no market-sensitive news out of the NAB camp today, let’s investigate what may be behind the bank’s recent price momentum.

What tailwinds are behind the NAB share price?

Zooming out to scan a wider time frame, it’s clear that shares in the bank have been charging higher over the last month.

The NAB share price came off a closing low of $26.91 on 22 September and hasn’t looked back since.

After some slight volatility to start October, it has climbed 8% since this time, returning to its pre-pandemic trading levels once more.

It’s worth noting that a handful of analysts have buy ratings on the NAB share price, indicating a positive sentiment that is generally a bullish signal.

While some brokers have downgraded to hold or neutral from their buy stance, players like Ord Minnett have a price target of $29.50 on the NAB share price, indicating the potential for more upside yet.

Analysts at Goldman Sachs are also bullish on the company, assigning a $30.62 price target on its shares with a forecasted FY22 dividend of $1.40 per share.

If NAB manages to reach these targets, the Big 4 bank will be trading on a running dividend yield of 4.6%, a step up from its trailing 12-month (TTM) yield of 3.14%.

In fact, NAB is Goldman’s top-rated company among its ASX financials universe, as it is particularly impressed by the Aussie bank’s capital budgeting style, its position in the mortgage market and on valuations.

It’s also worth considering that the S&P/ASX 200 Financials index (XFJ) – of which NAB is a constituent – has posted equally as strong returns over the past month as well.

Although NAB leads the index, it still has climbed almost 5% in that time, and also kissed its 2-year high today.

With this momentum, it appears strengths are carried across the board in the ASX financials sector, a point that will be weighing in on NAB’s case.

NAB share price snapshot

The NAB share price has blown it out of the park this year to date, posting a 28% return – double that of the S&P/ASX 200 index (ASX: XJO) – since January 1.

Over the last 12 months, it has climbed 48.5%, well ahead of the benchmark index on this time frame as well.

The post NAB (ASX:NAB) share price nudges 2-year, post-COVID high appeared first on The Motley Fool Australia.

More reading

• What is the outlook for the NAB (ASX:NAB) share price?
• Analysts rate these 2 ASX dividend shares as buys
• Legal risk just increased for the Westpac (ASX:WBC) share price
• Why Goldman thinks the NAB (ASX:NAB) share price is undervalued
• 3 buy-rated ASX dividend shares for income investors

The author Zach Bristow has no positions 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.

Image-based social media company Pinterest (NYSE: PINS) is expected to report third-quarter earnings on Oct. 27. The company has fallen out of favor with the market after reporting a surprising fall in monthly active users (MAU) in its fiscal second quarter.

Pinterest gained a surge of new users and engagement on its platform at the onset of the pandemic, but that reversed in Q2 as economies reopened worldwide. The trend in MAU will be the primary concern of investors heading into third-quarter results. 

Reopening economies draw people away from Pinterest

Before last quarter, Pinterest was on a streak of adding monthly active users for 11 consecutive quarters, reaching a plateau of 478 million in fiscal Q1 of this year before shedding 24 million in Q2. Pinterest attributed the losses to consumers getting out of the house and spending less time on home computers as economies emerged from various stages of lockdown.

Nearly 7 billion doses of vaccines against COVID-19 have been administered worldwide, and thankfully they’re having the desired effect of reducing the number of people getting severely ill. That has given governments around the globe the confidence to open up more facets of their economies. If that was a primary cause of Pinterest’s MAU losses in Q2, the drop likely continued into Q3.

Still, investors will want to know from the company if user losses ended at some point in the quarter. It would be encouraging if management were to say that the company continued to lose users in the first half of the quarter, but then the direction turned around and it gained a modest amount of users in the second half of the quarter. 

Importantly, MAU are vital to Pinterest’s business prospects. The company’s site is free to join. Pinterest makes money by showing advertisements to existing users who are browsing through its platform. The more people on its platform, the more advertisements the company can sell. Pinterest’s second-quarter revenue increased 125% in Q2 from the same time last year.

Additionally, it will be interesting to observe if management mentions any benefits to Pinterest from Facebook‘s troubles. Facebook is facing public backlash about the negative effects its platforms have on teenage girls. When Facebook faced public outrage about a different issue last year, Pinterest noted it experienced a boost in ad revenue. 

Pinterest’s stock price could be tied to MAU trends

Analysts on Wall Street expect Pinterest to report revenue of $631 million and earnings per share of $0.23 in Q3, which would be increases of 42.7% and 76.9%, respectively, from the same quarter last year. As impressive as those growth figures would be, the company’s stock price could fall even if it hits those targets.

That’s because investors will be focused primarily on the trend in MAU, which can affect the company’s long-term earning potential. And changes in variables that affect long-term results are weighted more heavily than one-time items like an individual quarter’s revenue or earnings per share. Investors shall soon see. 

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

The post Pinterest Q3 earnings: Here’s what to look for appeared first on The Motley Fool Australia.

More reading

• If Paypal buys Pinterest, what could it mean for Afterpay shares?
• Pinterest stock: Buy, sell, or hold ahead of possible buyout?
• Why PayPal investors got nervous on Wednesday

Parkev Tatevosian has no position in any of the stocks mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its 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 shares of and has recommended Facebook and Pinterest. The Motley Fool Australia has recommended Facebook and Pinterest. 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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The Nanosonics Ltd (ASX: NAN) share price had a solid start to the day but is fading in afternoon trade.

At the time of writing, the infection prevention company’s shares are down slightly to $5.95.

This means Nanosonics’ shares are now down 28% from its 52-week high.

Is the Nanosonics share price good value?

According to a note out of Morgans this morning, its analysts believe the Nanosonics share price is in the buy zone.

The notes reveals that the broker has upgraded the company’s shares to an add rating but cut the price target on them to $6.97.

Based on the current Nanosonics share price, this suggests there is almost 17% upside for its shares over the next 12 months.

What did the broker say?

Morgans notes that Nanosonics recently revealed its expectations for a significantly greater cost base than it was expecting.

It commented: “The increase in operating costs to A$90.0m is a big step up from the $70.8m incurred in FY21. The continued investment in R&D helps underpin the long-term growth prospects in the business. Our previous research note assumed a cost base of A$82.5m which was clearly below company guidance and needed adjustment.”

This has led to the broker downgrading its earnings forecasts accordingly.

Morgans explained: “We have made no changes to revenue for FY23/24, however the higher cost base results in an NPAT downgrade to A$19.0m (from A$26.9m) and to A$27.6m (from A$35.9m) in FY23/24 respectively. We note we have assumed a modest revenue contribution of A$8.3m from flexible endoscope sales staring in FY23.”

While this has resulted in a lower valuation, the recent weakness in the Nanosonics share price offsets this and underpinned the recommendation upgrade.

It concludes: “We have upgraded our recommendation to Add from Hold. Despite the lower valuation and target price there is still over 15% upside to our target price which provides the opportunity to upgrade the recommendation.”

The post Broker upgrades Nanosonics (ASX:NAB) share price to a buy rating appeared first on The Motley Fool Australia.

More reading

• These were the worst performing ASX 200 shares last week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Nanosonics Limited. The Motley Fool Australia owns shares of and has recommended Nanosonics 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 Insurance Australia Group Ltd (ASX: IAG) share price hasn’t had a fantastic couple of weeks on the ASX boards. IAG shares are currently down around 6% since last Monday (11 October), putting them flat over the past month.

This ASX 200 company has had a rather wild 2021 so far. Its shares are up 6.7% year to date on current pricing, with plenty of volatility thrown in.

At the time of writing, the IAG share price is $5.02, up 0.2% for the day so far.

IAG’s miserly performance over the past fortnight or so puts focus on its dividend. As any income investor would know, lower share prices equate to a higher starting dividend yield.

What are IAG’s most recent dividends worth today?

So IAG has paid out two dividends over the past 12 months, as is the custom on the ASX 200. These dividends consisted of a March interim dividend of 7 cents per share, unfranked. This is in addition to the final September dividend of 13 cents per share, also unfranked. That comes out at a total of 20 cents per share for FY21, giving today’s IAG share price a running yield of 3.98%.

That’s a fairly meaty dividend by ASX standards today. It certainly tops what all four of the major ASX banks are currently offering. So what kind of payout ratio does this dividend represent?

The payout ratio is a favourite metric of the dividend investor. It maps out what proportion of a company’s earnings per share (EPS) are being paid out as a dividend. As such, it can lend some useful insights into the company’s financial health, giving an indication of whether or not a dividend is sustainable. For example, if a company is paying out 110% of its earnings as a dividend, it would be a clear red flag that the dividend can’t be maintained at its current level for long.

So how does IAG’s most recent payout stack up? After all, FY21’s total dividend of 20 cents per share is far higher than FY20’s total of 10 cents.

What kind of payout ratio does that give this ASX 200 share?

Luckily, it’s fairly easy to work out. In IAG’s earnings report for FY2021 that it delivered back in August, the company informed investors it managed to bring in 28.51 cents in diluted cash earnings per share. Since IAG paid out 20 cents of that EPS as dividends, we can determine that IAG’s FY21 payout ratio was approximately 70.15%.

In other words, IAG forked out 70.15% of its earnings as dividends and retained the remaining 29.85% within its business. If we use non-diluted cash earnings, the payout ratio is closer to 66%.

Last financial year, IAG delivered 12.12 cents per share in EPS, and forked out 10 cents in dividends, meaning its payout ratio has actually fallen from 82.5% in FY20 to 70.15% in FY21, even though it doubled its dividend.

IAG dividend policy dictates the company will pay out 60-80% of its EPS as dividends, so this latest dividend also meets this criterion.

Given IAG’s optimistic guidance for FY22, it could be likely this level of income can be maintained next year as well (but we shall have to wait and see).

At the current IAG share price, this insurance giant has a market capitalisation of $12.39 billion.

The post What is the current IAG (ASX:IAG) dividend payout ratio? appeared first on The Motley Fool Australia.

More reading

• The IAG (ASX:IAG) share price has slumped 8% in a week. Here’s why
• These were the worst performing ASX 200 shares last week
• Why Harvey Norman, IAG, Pendal, and Treasury Wine are dropping
• Here’s why the IAG (ASX: IAG) share price is down 3% on Friday
• ASX 200 (ASX:XJO) midday update: Rio Tinto cuts guidance, Treasury Wine disappoints

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Insurance Australia 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 Super Retail Group Ltd (ASX: SUL) share price is tumbling despite releasing a bullish trading update yesterday.

The Super Retail share price fell 4.9% to $12.58 during lunch time trade – making it the second worst performer on the S&P/ASX 200 Index (Index:^AXJO).

Only the Flight Centre Travel Group Ltd (ASX: FLT) share price is faring worse as it slumped 5.3%, while the Webjet Limited (ASX: WEB) share price is in third spot with a 3.7% decline.

Super Retail share price derailed by downgrade

Super Retail has fallen out of favour after JP Morgan downgraded its recommendation to “neutral” from “overweight”.

The broker believes the Super Retail share price is at risk of missing market expectation. This is despite the sports, auto and outdoor retail group giving a positive update on Wednesday that sent its share price jumping 1.7%.

When a positive trading outlook isn’t enough

Super Retail has plenty of inventory, so it will probably avoid the COVID-19 supply problems facing its peers.

This means the Super Retail share price should benefit from strong consumer spending heading into Black Friday and the Christmas shopping season.

The group’s like-for-like (LFL) sales are also holding up well despite lockdowns in New South Wales and Victoria.

LFL sales grew 10% in the first 16 weeks of the financial year and would have grown by 27% if Victoria and NSW were excluded, noted JPMorgan. LFL refers to sales at stores that have been opened for a year or more.

Super Retail share price is no bargain

“However, we see downside risk of up to ~7% to consensus earnings, while [Super Cheap is] trading on a relatively full 15.6x FY23 PER,” said JPMorgan.

The broker also believes that Super Cheap’s gross margins have peaked at 48% in FY21. That’s 300 basis points higher than the pre-COVID average.

This is because Super Cheap, like many other retailers, did not need to offer discounts to attract sales. Widespread shortages of goods mean this is a sellers’ market.

Margins and costs moving in wrong direction

But this is as good as it gets. JPMorgan is forecasting Super Retail’s gross margin will contract by 70 basis points a year for the next two years.

After all, the lack of discounts and promotions can’t last – something consumers will be happy about.

Further, costs are expected to increase and will outpace sales growth. JPMorgan believes expenses will grow by 6.6% over the next two years when sales are only forecast to rise by 6.4% a year.

The broker’s 12-month price target on the Super Retail share price is $14.20 a share.

The post Why the Super Retail (ASX:SUL) share price is crashing today appeared first on The Motley Fool Australia.

More reading

• Why A2 Milk, Eroad, Flight Centre, and Webjet shares are sinking
• The Webjet (ASX:WEB) share price is having a good month but it’s still 30% lower than pre-COVID levels
• ASX 200 (ASX:XJO) midday update: Aristocrat hits record high, Flight Centre sinks
• Why is the Flight Centre (ASX:FLT) share price down 6% today?
• Travel is opening up. So, why is the Flight Centre (ASX:FLT) share price still the most shorted on the ASX?

Motley Fool contributor Brendon Lau owns shares of Webjet Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited and Webjet Ltd. 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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