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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a small gain. At the time of writing, the benchmark index is up 0.15% to 7,499 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

Adore Beauty Group Ltd (ASX: ABY)

The Adore Beauty share price is up 3.5% to $4.99. This follows the release of the online beauty retailer’s full year results. For the 12 months ended 30 June, Adore Beauty reported a 48% increase in revenue to $179.3 million and a 53% jump in EBITDA to $7.6 million. A key driver of this growth was a 39% increase in active customers to 818,000.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price has risen 6% to $21.25. Investors have been buying the iron ore miner’s shares following the release of its full year result. For the 12 months ended 30 June, Fortescue reported a 117% increase in net profit after tax to US$10.3 billion. This was just ahead of the analyst consensus estimate of US$10.2 billion. This strong performance allowed the Fortescue Board to declare a fully franked final dividend of $2.11 per share. This doubled its full year dividend to $3.58 per share.

InvoCare Limited (ASX: IVC)

The InvoCare share price has jumped 8% to $12.14. This follows the release of a strong half year update by the funeral company this morning. InvoCare returned to form during the first half, delivering a 13% increase in operating revenue to $257.3 million and a 31% lift in operating EBITDA to $63.6 million.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price has surged 11% higher to $14.42. This strong gain has been driven by the release of the online furniture and homewares retailer’s full year results. And while its numbers were largely pre-released at the end of July, today’s release included an update on current trading. That update revealed that revenue between 1 July and 27 August was up 49% over the prior corresponding period.

The post Why Adore Beauty, Fortescue, InvoCare, & Temple & Webster are charging higher appeared first on The Motley Fool Australia.

More reading

• Adore Beauty (ASX:ABY) share price climbs on record result
• Fortescue (ASX:FMG) share price jumps 6% on surging revenue
• ASX 200 midday update: Fortescue result and dividend impress, Altium sinks
• The Fortescue (ASX:FMG) dividend has doubled to record levels
• Temple and Webster (ASX:TPW) share price jumps 13% as revenue soars

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 Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended InvoCare Limited and Temple & Webster Group 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 ReadCloud Ltd (ASX: RCL) share price is sliding after the company released its earnings for the financial year 2021 (FY21).

Right now, the ReadCloud share price is trading at 29 cents, 3.33% lower than its previous close.

ReadCloud share price slumps despite improved margin

Here’s how the provider of digital e-learning resources performed in FY21:

• Maiden full-year underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) profit of $15,553, up from FY20’s underlying EBITDA loss of $161,141
• Statutory net loss after tax of $1.15 million
• $7.68 million of revenue, up 3.1% on that of FY20.

FY21 was a year of ups and downs for ReadCloud.

The company advised that its VET segment saw a 52% increase in gross profit to $2.9 million.

Its full-curriculum segment’s revenue dropped 17% to $3.92 million as a result of a $1 million reduction in reseller revenue and the loss of 4 school customers.

ReadCloud said the drop in revenue was partially offset by an increase in eBook sales and new direct full-curriculum customer schools.

The segment recorded $1.18 million of profit.

The ReadCloud platform saw a 21% increase in direct full-curriculum users, of which it now has 57,000. The number of VET-in-school users also increased 56% to 14,000.

The company’s platform now has more than 116,000 users and more than 550 school and educational institution customers.

Finally, ReadCloud’s published and bookseller expenses dropped to $3.05 million in FY21, down from $3.89 million in FY20.

The company ended the period with $6.3 million of cash and $460,000 in debt.

What happened in FY21 for ReadCloud?

Acquisitions and enhancements drove ReadCloud and its share price in FY21.

The company completed its acquisitions of the College of Sound & Music Production and the Ripponlea Institute in FY21.

It’s now the second-largest private operator in the Vocational Education & Training-in-Schools market in Australia by student numbers and the largest by the number of VET qualifications offered.

ReadCloud spent $1.8 million to acquire the Ripponlea Institute, using a mix of cash and scrip. The institute provides VET programs in the language segment to 70 Australian secondary schools and Certificate IV in Training and Assessment.

According to ReadCloud, the College of Sound & Music Production is the market leader in VET courses for the music industry. It provides VET programs to 184 Australian secondary schools. ReadCloud paid $1.45 million for the acquisition, using a combination of cash and ReadCloud shares.

Additionally, ReadCloud worked to enhance its software platform in FY21. The improvements will boost its scalability and maintain its competitive advantage.

Over FY21, the company signed up 22 new schools for full curriculum needs in 2021. To help navigate the challenges, ReadCloud signed up 3 new full-curriculum resellers during FY21.  

As at 30 July 2021, ReadCloud had more than 57,000 direct full-curriculum school customer users, 21% more than it did at the same time the prior year. It also had more than 45,000 reseller full curriculum school customer users, down 20% compared to June 2020.  

What’s next for ReadCloud?

Here’s what those interested in the ReadCloud share price might want to keep an eye on in FY22:

The company plans to leverage its new acquisitions by taking advantage of new cross-selling opportunities.

85% of ReadCloud’s school customers only use one of its VET providers.

It believes schools generally prefer to deal with fewer registered training organisations to simplify the compliance requirements and to only use one software platform.

ReadCloud plans to begin cross-selling courses across its businesses in the future and expects to see the benefits in FY22.

Additionally, ReadCloud will invest in its full curriculum sales channel in FY22.

In response to COVID-19 restrictions, ReadCloud has implemented a new outbound and online video force selling its full-curriculum segment. The new sales strategy has already brought about a pipeline the company’s working on for the 2022 school selling season.

Finally, ReadCloud plans to grow its reseller sales channels. It’s in discussions with a number of school booksellers that might be interested in becoming a ReadCloud reseller.

The post ReadCloud (ASX:RCL) share price slips despite maiden EBITDA profit appeared first on The Motley Fool Australia.

More reading

• Sonic Healthcare (ASX:SHL) share price struggles despite COVID passport positioning
• Why Adore Beauty, Fortescue, InvoCare, & Temple & Webster are charging higher
• Magnis Energy (ASX:MNS) share price lifts 5% on lithium battery update
• Altium (ASX:ALU) share price down 12% after earnings report
• Wesfarmers (ASX:WES) share price dips amid boss’ call for easing of restrictions

Motley Fool contributor Brooke Cooper 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 ReadCloud Limited. The Motley Fool Australia has recommended ReadCloud 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 Magnis Energy Technologies Ltd (ASX: MNS) share price is pushing higher today after the company provided a project update.

At the time of writing, Magnis shares are up 5.56% to 38 cents apiece. In comparison, the All Ordinaries Index (ASX: XAO) is up 0.26% to 7,780 points.

What did Magnis announce?

In a statement to the ASX, Magnis advised that the project status of its New York plant is 23% completed.

The company has completed initial works including the internal building clear-out. Now, facility customisation work has commenced with machinery roll-out to start next month. Furthermore, construction material for the facility has continued to arrive at the factory.

The iM3NY team collaborated with Ramboll to continue advancing the lithium battery plant’s design feed information. This includes progress on a number of detailed engineering design works to bring the project online.

Following the Environmental Justice plan approval, the company’s Air Permit application, currently at the public review stage, has received no objections to date. It is expected to be given the green light sometime in the near future.

The company also appointed experienced renewable energy specialist Lukasz Cianciara as Director of Investments.

Mr Cianciara has spent more than 30 years in Senior Level Capital Markets, working for a variety of high-profile companies. They include Citadel Investment Group, Castlepines Global Equity, Brean Capital, CIBC, Sumitomo Bank Capital Markets and Credit Lyonnais.

Management commentary

iM3NY CEO Chaitanya Sharma noted the company’s rapid developments, saying:

There is some serious progress made to date, with things about to ramp up from this point on, which is exciting for our ever-growing team. We are working tirelessly to achieve our milestones on time and on budget.

Magnis chair Frank Poullas added:

Great progress continues to be made and the appointment of Lukasz is a major milestone as iM3NY looks towards a US Listing.

Magnis share price snapshot

Over the last 12 months, the Magnis share price has soared almost 90%. This came off the back of the US government awarding a lithium-ion battery supply contract to Magnis’ partner, C4V.

On valuation grounds, Magnis presides a market capitalisation of roughly $353 million with approximately 929 million shares on its registry.

The post Magnis Energy (ASX:MNS) share price lifts 5% on lithium battery update appeared first on The Motley Fool Australia.

More reading

• Magnis Energy (ASX:MNS) share price lifts 11% on battery plant update
• Magnis (ASX:MNS) share price soars 16% on funding success
• The Magnis (ASX:MNS) share price freeze continues, quarterly update released

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Altium Ltd (ASX: ALU) share price has sunk into the red during afternoon trade on Monday.

Shares in the software company are on the decline as the company reported its FY21 earnings with mixed results.

Let’s investigate further.

How did Altium perform in FY21?

Altium grew its total revenue by just 1% year on year to US$191 million. Excluding the divested TASKING business, revenue actually climbed 6% from the year prior.

In terms of the revenue split, board and systems revenue gained 2% over the year, whereas the company’s Octopart segment revenue increased by 42% to US$27 million.

Conversely, Altium’s manufacturing revenue came in 7% behind FY20 at just US$2.4 million.

Altium’s recurring revenue also increased as a percentage of overall revenue, comprising 65% of total sales versus 59% the year prior.

Despite the revenue growth, the company’s profit before tax declined 7% year on year to US$48 million. Altium explained this was from its operating costs increasing at a faster rate than sales revenue. Its FY21 EBITDA also decreased by 3% from the year prior.

Even still, net profit after tax (NPAT) came in at US$35 million, which signifies around an 80% increase from FY20.

Altium’s management foresees a period of growth for FY22. In what should be a positive for the Altium share price, the company has upgraded guidance for FY22 and estimates revenue of between US$209 million to US$217 million for the year. This calls for 16% to 20% sales growth from FY21.

The company also forecasts that annual recurring revenue will increase a further 23%-27% over the next year.

Despite the seemingly robust performance, investors are selling Altium shares from the open on Monday.

At the time of writing, Altium shares have clawed back some ground and are now exchanging hands at $31.02, still an 11% drop into the red.

Altium share price snapshot

The Altium share price has struggled this year to date, posting a loss of 11% since January 1. This extends the loss over the previous 12 months to almost 16%.

Both of these results have lagged the S&P/ASX 200 index (ASX: XJO)’s return of about 25% over the past year.

The post Altium (ASX:ALU) share price down 12% after earnings report appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Fortescue result and dividend impress, Altium sinks
• Altium (ASX:ALU) share price on watch after hitting guidance and upgrading outlook
• 5 things to watch on the ASX 200 on Monday
• 3 fantastic ASX shares to buy in September
• 3 exciting ASX growth shares for smart 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. owns shares of and has recommended Altium. The Motley Fool Australia owns shares of and has recommended Altium. 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 Wesfarmers Ltd (ASX: WES) share price has slipped to a 1-month low. This comes as prolonged lockdowns weigh on the diversified conglomerate.

Wesfarmers CEO Rob Scott told the Australian Financial Review (AFR) that it might be time to take a different approach instead of being “fully open or fully shut”.

What did Wesfarmers’ CEO say?

Scott argued for a “more considered plan for the reopening of certain sectors under COVID-safe conditions and easing of some community restrictions, including greater freedoms for those who are vaccinated.”

He flagged that continued lockdowns in New South Wales and Victoria would eventually lead to a point where the “benefits of those lockdowns are outweighed by the broader harm that’s being done.”

About Wesfarmers, Scott said, “We’ve got nearly one in 10 workers in Sydney stood down without pay.”

We are seeing mental health issues skyrocket – particularly in the under-30s. We are seeing small businesses and even large businesses under enormous stress. There comes a tipping point where all of this harm being done by lockdowns is worse than the problem we are trying to solve.

Wesfarmers share price slides to month low

The Wesfarmers share price was trending strongly in August, briefly rallying to an all-time high of $67.20 on 20 August.

The record high was short-lived as Wesfarmers shares closed last Thursday at $63.96 – the day before its FY21 results announcement.

Wesfarmers shares fell 2.75% to $62.20 on Friday. That’s after the company flagged the effect of recent COVID-related lockdowns on its retail divisions.

Bunnings sales for the first 7 weeks of FY22 had declined by 4.7% on the prior corresponding period (pcp). Officeworks sales had also slumped 1.5% on the pcp. While combined Kmart and Target sales for the first 8 weeks of FY22 tumbled 14.3% on pcp. Almost 50% of Kmart and Target stores were forced to close by mid-August.

Management warned that:

Given the impact of lockdowns in recent months and the prospect of continued trading restrictions, earnings in the Group’s retail businesses during the first half of the 2022 financial year may be below the prior corresponding period.

At the time of writing, Wesfarmers share price is down another 3.2% to a low $60.21.

The post Wesfarmers (ASX:WES) share price dips amid boss’ call for easing of restrictions appeared first on The Motley Fool Australia.

More reading

• ASX 200 flat, Wesfarmers drops, Nextdc declines
• Why Integral Diagnostics, Mayne Pharma, NEXTDC, & Wesfarmers are dropping
• Wesfarmers (ASX:WES) share price slides as FY21 results flag weak near-term outlook
• ASX 200 midday update: Wesfarmers’ $2.3bn capital return, Appen & Pilbara Minerals fall
• The Wesfarmers (ASX:WES) dividend has jumped by 17%

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 owns shares of and has recommended Wesfarmers 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 Ava Risk Group Ltd (ASX: AVA) share price has been a positive performer on Monday following the release of its full year results.

At the time of writing, the risk management technology company’s shares are up 14% to 51.5 cents.

Ava Risk share price jumps after more than doubling its profits

• Revenue increased 41% to $65 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) up 116% to $16 million
• Net profit after tax jumped 178% to $13.75 million
• Net operating cash flow rose 195% to $17.6 million
• Capital Return of $39.2 million (or ~16 cents per share) and $1 million on-market buy back

What happened in FY 2021 for Ava Risk?

For the 12 months ended 30 June, Ava Risk reported a 41% increase in revenue to $65 million. This was driven by a 61% jump in Services revenue to $40.34 million and a 17% lift in Technology revenue to $24.7 million.

In respect to its Services revenue, management advised that this increase reflects the expansion of its Ava Global Logistics customer base and the capture of a greater share of existing client spend. Whereas its Technology business benefited from an increase in licensing fees from the Indian MOD project.

Supporting its strong profit growth was an improvement in its margins. Management advised that its gross margin improved despite a greater mix of revenues coming from the lower margin Services business. This was thanks to the Technology business improving its gross margin over the previous year.

Furthermore, its operating expenses only increased 7.8% year on year to $16.32 million, leading to operating leverage. This ultimately supported a 178% jump in net profit after tax to $13.75 million.

But perhaps the biggest positive that is supporting the Ava Risk share price is the announcement of a major capital return.

Earlier this month the company signed an agreement to offoad its Services business. This is expected to leave the company with $40.2 million in excess capital, which will soon be returned to shareholders.

An approximate $39.2 million (or ~16 cents per share) capital return has been proposed and will be voted on at its annual general meeting. In addition, a $1 million on-market buy back will be undertaken.

Based on the current Ava Risk share price, the capital return equates to a 31% yield.

What did management say?

Ava Risk’s CEO, Rob Broomfield, commented: “Since acquiring MaxSec Group in December 2017, Ava Risk Group has been delivering consistent growth and moved into profitability over the past two years. We are really pleased with the crystallisation of value achieved from the Services Division, Ava Global, and the strong net cash return from the divestment – 587% over five years. We are also seeing strong returns from the Technology Division, both in top line growth and operational efficiencies, which is providing us with the capability to execute on future growth initiatives.”

“Looking ahead, we are optimistic about our technology businesses – FFT and BQT – which together reported FY2021 revenue of $24.7 million and EBITDA of $8.3 million, up 17% and 64%, respectively. The increased momentum noted in the fourth quarter has continued into the current quarter, and new orders are building on the $4.3 million of FY2021 backlog. In addition to these new orders, we have already received over half of the $1.5 million of contracts expected in FY2021 but delayed.”

What’s next for Ava Risk in FY 2022?

Positively, management notes that it has a very strong pipeline of sales opportunities in existing markets, and a growing pipeline in new markets. This includes in its mining conveyor solution Aura IQ.

As result, it appears confident of further growth in the Technology business in FY 2022.

Mr Broomfield commented: “Importantly, we are looking beyond FY2022 to fulfil our vision of being a global leader in actionable, intelligent data streams that protect and optimise critical assets – by leveraging our partnerships, growing recurring revenue and leveraging our scalable model. We have a great team behind us, a strong network of partners, an exceptional customer base and ended the year in a robust financial position.”

The Ava Risk share price is still down 12.5% year to date despite today’s strong gain.

The post Ava Risk (ASX:AVA) share price jumps 14% on strong FY21 profit growth & capital return appeared first on The Motley Fool Australia.

More reading

• Why the Ava Risk (ASX:AVA) share price is soaring 10% today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Don’t underestimate the risk of a recession in fortress Australia, which could leave many ASX 200 shares vulnerable in its wake.

The fact is, the S&P/ASX 200 Index (Index:^AXJO) is not pricing in any chance of a recession here. Otherwise, it won’t be trading this close to its record high.

But we could get our first taste of a recession as early as Wednesday. That’s when the government’s June quarter GDP figures are released.

Economic hit in the June quarter

Economists at Citigroup and AMP Ltd (ASX: AMP) are warning that our economy may have slightly contracted in the latest quarter, reported Bloomberg.

The period is before the full impact of the COVID-19 lockdowns in Victoria and New South Wales is felt.

The harsh lockdowns brought on by the highly virulent delta-strain is almost certain to cause the economy to contract in the September quarter.

ASX 200 shares could get rocked by a recession

If the GDP figures are negative in the three months to end of June, we are almost certain to be in a technical recession. That’s defined as two consecutive quarters of negative growth.

However, if the June quarter figure can keep its head above breakeven, there is a good chance Australia can avoid a recession.

This is because many are expecting a big bounce back in the December quarter as vaccination rates increase and the states loosen restrictions.

Uncertain outlook not priced into ASX shares

The jury is still out on Wednesday’s GDP release though. A survey of economists conducted by Bloomberg runs from the -0.1% forecast by Citi and AMP to up to more than +1%.

It’s highly unusual for such a wide range of responses, which underscores how volatile and difficult it is to read the economy at this point.

The more important question is whether ASX 200 share investors should care.

How ASX 200 shares could hold up in a recession

Many of our large cap shares generate a good proportion of their income from overseas. The economic outlook for the rest of the world is rosier than ours.

Further, GDP reports are backward looking. By the time we get a firmer read on a recession, the December recovery party could already be in full swing.

And in case you haven’t noticed, any dip in the market has been short-lived. The amount of cheap money that’s pumped into the system by dovish central bankers is floating all boats, even leaky ones!

ASX banks in the firing line

On the other hand, there is one very large sector on the ASX 200 that could take a big hit if we do slip into a recession.

This is the ASX banking sector where many retail investors hold significant holdings in, according to Citi. The Commonwealth Bank of Australia (ASX: CBA) share price did well through the August reporting season.

Its peers have also outperformed the ASX 200 this month. These include the Westpac Banking Corp (ASX: WBC) share price, Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price and National Australia Bank Ltd. (ASX: NAB) share price.

ASX bank profit growth at risk

“Like many investors, we were unsurprised by reporting season’s low bad debts,” said Citi.

“We were, however, taken back by the second order of low rates, with NIM compression and markets revenues hitting core profits. Despite core profit concerns and a growing delta outbreak, the Majors’ share prices outperformed over the month.”

No leaving record low rates

Further bank profit growth will have to rely on interest rate hikes. That’s looking less likely anytime soon due to the economic weakness.

“With low rates set to continue to weigh on core profits, but share prices at or around 2-year highs, we turn more bearish with consensus seemingly pricing in little for the risks around the delta variant,” added Citi.

If the broker is right, this might not be a bad time to be thinking of taking some profit.

The post Australia’s rising delta recession risk could hit these ASX 200 shares badly appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Fortescue result and dividend impress, Altium sinks
• ASX 200 Weekly Wrap: A mixed bag of earnings dominates ASX
• 5 things to watch on the ASX 200 on Monday
• How has the Westpac (ASX:WBC) share price performed against the banking sector in August?
• The NAB (ASX:NAB) share price has gained 10% in the last 6 months

Motley Fool contributor Brendon Lau owns shares of AMP Limited, Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, 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 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.

Most people have heard of the social network company Facebook (NASDAQ: FB); and with 1.9 billion daily active users, nearly 1 in 4 people worldwide use Facebook daily. But for investors, the business story goes well beyond being a website where people post pictures of their pet cat; here are four reasons Facebook is a compelling investment opportunity today.

1. A dynamic business model

Facebook started as a simple social media network in the early 2000s, but founder and CEO Mark Zuckerberg has been active in positioning the company for future growth. Zuckerberg famously predicted the importance of images to social media, buying Instagram for $1 billion in 2012, in what is commonly looked back on as one of the “steals” of corporate history, now that Instagram boasts more than 1 billion users.

Facebook later bought WhatsApp in 2014 in a deal worth $16 billion in cash and stock; the WhatsApp platform now has more than 2 billion users and is the world’s most popular mobile messenger. Zuckerberg has also leaned into augmented reality (AR) and virtual reality (VR), buying VR hardware company Oculus in 2014 for $2 billion, and recently announcing a new team to develop Facebook’s “Metaverse” business.

2. A “cash cow” with growth

These strategic moves have created value for Facebook over time via both user growth and monetization. Facebook makes the majority of its revenue from advertising, so by growing users and generating increasingly more revenue from them, it’s a two-sided way to grow revenue.

Facebook’s total number of daily users has grown 20% over the past two years, to 1.9 billion. Facebook is increasing its average revenue per user (ARPU) at the same time, hitting $10.12 per user in 2021’s second quarter, a 43% increase year-over-year.

With more users generating more revenue, Facebook’s overall revenue growth is impressive. In its Q2 2021, Facebook did $29 billion in revenue, a 56% increase over 2020.

3. An aggressive stock buyback

The company is very profitable and is generating a lot of cash as revenue grows larger. Facebook converted $8.5 billion, or 29% of its revenue, into free cash flow (FCF) in Q2; FCF is the cash remaining after spending what it needs to on the business.

Rather than pay a dividend to investors, Facebook is buying back its own stock. When a company buys back its stock, it increases the value of the remaining shares because its profits are split between a smaller number of shares. The result is an increase in earnings per share (EPS), which typically drives the stock price higher over time.

Facebook bought back $7.1 billion of its stock during 2021 Q2, and its total number of shares outstanding has decreased to 2.877 billion from 2.921 billion at the end of 2018. The company has $64 billion on its balance sheet in cash and securities, so investors should look for the buybacks to continue.

4. A stock that’s on sale

Facebook is a huge company, trading at a market cap of $1.05 trillion. The company is expected to earn $14.08 per share for the full year of 2021, which values the stock at a price-to-earnings ratio of 26.

Hitting its estimates would mean a 40% increase in EPS from 2020, and that’s an impressive jump for a company of such size. Analysts are also expecting double-digit growth in 2022, so the current valuation seems very reasonable.

One aspect of Facebook that’s difficult to account for in its valuation is the company’s versatility. With all of that cash on its balance sheet and a forward-thinking management team, it’s hard to put a number on the potential value that Mark Zuckerberg can create in the future that isn’t obvious today. We can only look at what Facebook currently is. Still, the company’s ability to create new business segments through acquisitions or innovating is something that investors should keep in mind, especially given Zuckerberg’s enthusiasm for the Metaverse.

Still room to grow

Big technology companies rule the world, and Facebook is one of a select few in the trillion-dollar market cap club. But don’t be fooled; the business continues to grow, makes a ton of money, and returns value to shareholders through share buybacks and strategic moves that create long-term value in the company. There is a lot to like in Facebook, which makes it a compelling investment idea today. 

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

The post 4 reasons Facebook is a compelling buy appeared first on The Motley Fool Australia.

More reading

• Facebook (NASDAQ:FB) share price in focus as it reveals its answer to Zoom
• Why Facebook stock slipped on Tuesday
• Will Snap be worth more than Facebook by 2030?
• Amazon investors are getting its e-commerce business for free
• Why Facebook’s outlook for rest of 2021 doesn’t scare me

Justin Pope 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. The Motley Fool Australia has recommended Facebook. 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 Afterpay Ltd (ASX: APT) share price is having a great start to the week’s trading this Monday. At the time of writing, Afterpay shares are up a healthy 1.03% to $131.69. That’s well outperforming the broader S&P/ASX 200 Index (ASX: XJO), which is pretty much flat today, up 0.03% to 7,490 points so far.

So why are Afterpay shares having such a strong start to the week?

Well, it’s not entirely clear. There are no major news or announcements out of Afterpay itself today. However, there have been some interesting developments in the buy now, pay later (BNPL) space that Afterpay helped pioneer.

We got some news yesterday in regards to the BNPL aspirations of one of the largest companies on the planet. According to a report in the Australian Financial Review (AFR) over the weekend, Amazon.con Inc (NASDAQ: AMZN) has just inked a deal with the US-based BNPL provider Affirm Inc (NASDAQ: AFRM).

Amazon join’s Afterpay’s BNPL party

According to the report, Affirm will now be offered as a payment option on Amazon’s American e-commerce platform. Customers will reportedly be able to select Affirm’s BNPL option for purchases of US$50 or more, with the ability to ‘pay later’ in monthly instalments.

The report states that Affirm has confirmed that “the service was being tested with select customers now” and “would become more broadly available to shoppers in the coming months”. This won’t encompass the entire Amazon universe though. The company’s Whole Foods Market and Amazon Fresh divisions will not be eligible for BNPL to start with.

Given a company like Amazon is embracing BNPL is arguably great news for all BNPL providers, including Aftepray. This is why we might be seeing the Afterpay share price rising this Monday.

This development is just the latest chapter in what has been a phenomenal year for BNPL shares.

Just last month, the blockbuster announcement that Afterpay is to be acquired by Square Inc (NYSE: SQ), another US e-commerce giant, really put a rocket under the entire sector.

At the current Afterpay share price, the BNPL pioneer is up 36.2% over the past month alone, and up 10.66% year to date in 2021 so far. It’s also up 44% over the past 12 months.

At the current Afterpay share price, the company has a market capitalisation of $38.14 billion.

The post Afterpay (ASX:APT) share price rises amid Amazon’s BNPL move 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 Sebastian Bowen owns shares of Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Affirm Holdings, Inc., Amazon, and Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended 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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The Adore Beauty Group Ltd (ASX: ABY) share price is climbing in lunchtime trade on Monday. This follows the release of the online beauty retailer’s full-year results for the FY21 financial year.

At the time of writing, shares in the beauty company are levitating at $5.01, up 4.2%.

Adore Beauty share price rises as revenue increases 48%

The Adore beauty share price is moving well into the green today after the company delivered record numbers for the 12 months ending 30 June 2021. Here are some of the key highlights:

• Record revenue of $179.3 million, up 48% year-over-year
• Record earnings before interest, tax, depreciation, and amortisation (EBITDA) of $7.6 million, up 53% from FY20
• Active customers increased 39% year-over-year to 818,000
• Gross profit margin of 33.1%, up 1.2% from the prior year
• $29 million in cash at the end of FY21

What happened in FY21 for Adore Beauty?

In a massive financial year for the company, Adore Beauty managed to exceed its guidance and deliver strong growth in its first full-year result being publically listed.

Record revenue, profit, and customers were achieved in FY21. According to the release, COVID-19 lockdowns provided a spike in new and returning customers. In fact, active customers rose 39% from FY20.

Although the focus shifted away from cosmetics with consumers staying at home more, skincare products experienced a boost.

Furthermore, the accelerated online market shift resulted in a record revenue result of $179.3 million — representing a 48% increase on the prior corresponding period. Not only did revenue from customers increase through acquiring more buyers but annual revenue per active customer also rose 7% — indicating customers spent more.

Moreover, Adore ticked various items off its to-do list. This included launching a native iOS and Android mobile app, launching a loyalty program, and increasing brand awareness via an expanded national TV campaign. These achievements could be considered as positive for the Adore Beauty share price today.

While Adore’s EBITDA surged to a record $7.6 million for the period, net profit after tax came out at $46,000. For comparison, NPAT for FY20 was $898,000.

What did management say?

Adore Beauty CEO Tennealle O’Shannessy commented on the record result, stating:

Adore Beauty has had an exceptional start to listed life, delivering record revenue and profitability in its first full-year result. Our record financial performance in FY21 highlights the strength of our underlying business and our market-leading position as the online destination of choice within a large $11 billion addressable market.

Adore Beauty continues to capitalise on the structural shift to online channels, rapidly adding new customers that are profitable within the first year. We are committed to delivering a personalised and customer-led beauty discovery and shopping experience, underpinned by ease, convenience, and authentic, trusted content.

What’s the outlook for Adore Beauty?

Looking ahead, the Adore Beauty management has highlighted it continues to benefit from the ongoing structural shift due to COVID-19. In addition, year-to-date revenue in FY22 is up 26% on the prior corresponding period.

While the continued impact of lockdowns has provided a tailwind, it also adds uncertainty to operations. As a result, the company has not provided guidance on this basis. At the same time, EBITDA margins are expected to be between 2% and 4% as the company continues to reinvest for growth.

Adore Beauty share price snapshot

Investors might read today’s results and expect the Adore Beauty share price to have performed well over the past year.

Instead, shares in the online beauty retailer have dropped nearly 28% in the last 12 months. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has climbed 23.6%.

The post Adore Beauty (ASX:ABY) share price climbs on record result appeared first on The Motley Fool Australia.

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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 recommended Adore Beauty Group Limited. 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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