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Just yesterday, Woolworths Group Ltd (ASX: WOW) released its FY21 full-year results to the ASX. The retail conglomerate reported a busy year that saw its divestment from liquor and hotels business, Endeavour Group Ltd (ASX: EDV).

Meanwhile, Coles Group Ltd (ASX: COL) delivered its FY21 earnings on 18 August, announcing a solid performance despite continued disruptions. Its share price also edged higher on the result for the following days.

Comparing the financial figures of two companies can give investors a clearer picture of how the industry is travelling.

It’s no secret that COVID-19 has positively impacted the grocery market. However, all eyes are now on both supermarket giants to see if they can continue their strong growth in a post-pandemic world.

Below, we take a look at how the Woolworths earnings result stacks up against Coles’ numbers.

A recap on the Woolworths earnings result

Here’s a summary of the financial details that Woolworths posted for the 6 months ending 30 June 2021.

• Group sales of $67,278 million, up 5.7% on the prior corresponding period;
• Group earnings before interest and tax (EBIT) of $3,663 million, up 13.7%;
• Group net profit after tax (NPAT) of $1,972 million, up 22.9%; and
• Final dividend of 55 cents per share, up 14.6%.

The robust result came as the company noted customers shopped more frequently but with small basket sizes. In addition, 23 new stores were opened up, bringing the total network to 1,076 stores.

In early trade on Friday, the Woolworths share price is down 0.93% to $40.61.

How does this compare to Coles?

Coles revealed its own FY21 numbers, highlighting the surging grocery market. Let’s see how it stacked up against Woolworths’ earnings.

• Sales revenue of $38,562 million, up 3.1% on the prior corresponding period;
• Earnings before interest and tax (EBIT) of $1,873 million, up 6.3%;
• Net profit after tax of $1,005 million, up 7.5%; and
• Final dividend of 61 cents per share, up 6.1%.

Coles recorded a bumper year driven by strategic initiatives that were implemented to allow customers to spend more time at home during COVID-19. This included the continued roll-out of “Click & Collect”, the launch of a digital catalogue, and “Fresh Produce Easy Ordering”.

After the results announcement on 18 August, the company’s shares rallied to a record high of $18.94. However, investors decided to take profit off the table, sending its shares lower. At the time of writing, Coles shares are swapping hands for $17.69, up 0.28% on yesterday’s closing price.

Comparing Woolworths’ earnings with those of its rival, there are similarities in terms of revenue growth. Although when it comes to EBIT and NPAT, Woolworths is far ahead of Coles in both numbers and percentage increases.

Woolworths share price snapshot

It has been a blissful 12 months for Woolworths shares, posting a gain of more than 18% over the period. The company’s share price reached an all-time high of $42.66 last week, before also dipping lower due to profit-taking.

Based on today’s price, Woolworths has a market capitalisation of $51.9 billion, with approximately 1.2 billion shares on issue.

The post How does the Woolworths (ASX:WOW) earnings result compare to Coles (ASX:COL)? appeared first on The Motley Fool Australia.

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• Woolworths (ASX:WOW) share price gains on 23% profit surge
• Woolworths (ASX:WOW) share price on watch following FY21 results

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 COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The BWX Ltd (ASX: BWX) share price won’t be going anywhere on Friday.

This follows the personal care products company’s request for a trading halt this morning.

That request was made following the release of its full year results and the announcement of a capital raising.

BWX share price halted after results release

• Revenue increased 3.4% to $194.1 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 11.5% to $34.5 million
• Statutory net profit after tax up 60.9% to $23.7 million
• Earnings per share up 44.9% to 17.1 cents
• Fully franked final dividend of 3.1 cents per share
• $100 million equity raising to fund acquisition of 50.1% interest in Go-To Skincare

What happened in FY 2021 for BWX?

For the 12 months ended 30 June, BWX reported a 3.4% increase in revenue to $194.1 million. This was driven by strong sales volumes, reflecting a recovery in some regions from pandemic conditions and increased consumer adoption of retail omni-channel options.

Things were better for the company’s earnings, with underlying EBITDA rising 11.5% to $34.5 million. Management advised that this was driven by a 134bps improvement in its gross margin to 59.3%, a disciplined approach to its cost base, and efficiencies across manufacturing,

The key Sukin brand was the star performer during the year, delivering a 16% increase in sales to $95 million. This was supported by a modest increase in Nourished Life sales and offset slightly by declines in Andalou Naturals and Mineral Fusion sales.

What did management say?

BWX ‘s CEO and Managing Director, Dave Fenlon, commented: “BWX has recorded another solid financial performance in FY21. Despite continual COVID-19 related retail lockdowns, we achieved growth in sales, gross margin and profit, with increased market share across our core categories of skincare, body and hair.”

Mr Fenlon also spoke positively about the future, which could bode well for the BWX share price when it returns from its trading halt.

He said: “Our future trajectory has never been stronger. In FY21 we accelerated our growth in distribution points for our brands Sukin, Andalou Naturals and Mineral Fusion through our new strategic partnership with Chemist Warehouse, and new partnership with Woolworths Australia, and Walmart Canada, as well investment in our direct-to-consumer model to meet growing consumer demand.”

What’s next for BWX?

Mr Fenlon commented: “We enter financial year 2022 with momentum and a good execution against our Three Year Strategic Roadmap, and our soon-to-be opened manufacturing facility is expected to deliver a step change in both financial and operating performance. The current environment requires a proactive and responsive approach. While we continue to monitor our key markets – which are at varying stages of recovery – we are confident we have the right strategy and we are in the right category.”

The company’s future performance will also be boosted by the proposed acquisition of a 50.1% interest in Go-To Skincare for approximately $89 million. This values Go-To Skincare on a 100% enterprise value basis at $177 million, representing an FY 2021 EV/EBITDA acquisition multiple of 14.9x pre-synergies and 11.9x post-synergies.

Founded by Zoë Foster Blake in 2014, Go-To is an Australian skin care provider with a range of simple, trusted and effective skin care products for the masstige market. In FY 2021, it generated $36.8 million of revenue and $11.6 million of EBITDA.

The deal is expected to be mid-single digit earnings per share accretive on a FY 2021 pro forma basis (pre-synergies) and double digit earnings per share accretive post $3 million of potential synergies in the first full financial year.

To fund the deal, BWX is seeking to raise $100 million. This comprises an $85 million fully underwritten institutional placement and a $15 million share purchase plan.

The placement is being undertaken at $4.85 per new share, which represents an 8.7% discount to the BWX share price at yesterday’s close.

BWX share price performance

The BWX share price has been a strong performer in 2021. Since the start of the year, the company’s shares have gained 28%. This compares favourably to a 12% gain by the ASX 200.

The post BWX (ASX:BWX) share price halted following FY21 results and Go-To acquisition appeared first on The Motley Fool Australia.

More reading

• Own Zip (ASX:Z1P) shares? Here’s what to look out for in FY22.
• August hasn’t been a great month so far for the AGL (ASX:AGL) share price
• It’s been a good week so far for the AMP (ASX:AMP) share price
• Dusk (ASX:DSK) share price in focus after tripling profit in FY21
• NextDC (ASX:NXT) share price on watch after record FY21 performance

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 BWX 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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Zip Co Ltd (ASX: Z1P) shares are locked in a tug of war between bulls and bears following its FY21 results on Wednesday.

On the day of the announcement, the Zip share price tumbled 5.19% to an intraday low of $6.94 in the first few minutes of trade.

Buyers would step up, rallying its shares well into positive territory, up 1.78% to $7.45 by noon. Its gains would fade into the afternoon, closing 2.60% lower at $7.13.

In terms of results, Zip delivered an encouraging performance in FY21, with classic triple digit growth across key operating metrics.

Some key highlights include:

• Revenue of $403.2 million, up 150% year on year (FY20 $161 million)
• Transaction volumes of $5,8 billion, up 178.5% (FY20 $2.1 billion)
• Active customers at 7.3 million, up 247.5% (FY20 2.1 million)
• Active merchants at 51,300, up 109.4% (FY20 24,500)

But upon closer inspection, the company’s FY21 loss after tax ballooned to $653 million compared to a $19.94 million loss in FY20. This loss was primarily driven by the adjustment relating to its acquisition of Quadpay.

While Zip shares might remain in a lull state, let’s take a look at what might drive the Zip business in FY22.

Zip goes international

Europe and Middle East

In May, Zip announced its plans to acquire the remaining shares in its minority investments Twisto and Spotii.

The acquisition of Twisto provides Zip with the ability to “passport licensing” across Europe to further its regional expansion.

According to the results announcement, the Twisto business is performing well, with annualised revenue of $12 million and total transaction volumes of $230 million. Zip cited a strong product pipeline with a virtual card rollout to drive incremental growth in the region.

The Spotii acquisition was another strategic investment to provide an entry point for further regional expansion across the Gulf Cooperation Council (GCC) region.

Zip believes the region will be supported by strong e-commerce growth in addition to a strong pipeline of enterprise merchants.

Minority Asia investment

More recently, Zip completed a minority investment (25%) in a Philippines based BNPL solution. TendoPay delivers classic core instalment products with a unique repayments solution via salary deduction.

The results stated that the company is in the process of securing debt funding to provide future headroom for growth.

TendoPay has partnered with major brands including Samsung, Havaianas and Western Appliances with a strong pipeline for the next 6 months.

Moving to full ownership in Africa

Zip will purchase the remaining shares in South Africa-based BNPL, Payflex.

Zip initially acquired a 24.7% stake in Payflex in October 2019.

The full ownership of Payflex is viewed as a “strong first-mover advantage with access to broader African markets”.

Zip is targeting Africa given its significant population of mobile payment users and underlying fundamentals of rapid smartphone adoption. The company believes its services can help address and support the “underbanked” population.

Zip share price snapshot

The Zip share price has been moving sideways since March this year, despite a 26.3% year-to-date performance.

The post Own Zip (ASX:Z1P) shares? Here’s what to look out for in FY22. appeared first on The Motley Fool Australia.

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• Why Bravura, Nine, Reece, & Zip shares are sinking today
• ASX 200 midday update: WiseTech rockets, Afterpay & Zip report

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. owns shares of and has recommended ZIPCOLTD FPO. 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 AGL Energy Limited (ASX: AGL) share price hasn’t exactly established a good reputation as an ASX 200 performer in 2021 so far.

Even before this month when AGL reported its FY21 earnings, AGL shares had lost around 49.7% of their value between January and the end of July.

AGL reported its FY21 earnings more than a fortnight ago on 12 August. Here’s a summary of what my Fool colleague Marc reported at the time:

• Revenues dropped 10% on the prior corresponding period (pcp) to $10.9 billion.
• Underlying profits down 33.5% to $537 million on the pcp.
• Underlying earnings per share (EPS) fell 31.6% to 86.2 cents.
• Full-year dividend of 75 cents per share (41 cents interim + 35 cents final), a 23.5% drop from the pcp

This earnings report has been the centrepiece of AGL’s August performance so far. To illustrate, here’s a graph of the AGL share price over the month to date:

As you can see, AGL was having a relatively positive month until the release of its FY21 earnings. In fact, between 30 July and 11 August, AGL shares were up around 5%.

However, since 12 August, investors seemed to have changed their minds. On yesterday’s closing share price of $6.71 a share, AGL is now down around 11.7% since the day before the earnings were released.

That puts this company’s losses for the month of August so far at roughly 7.2%.

About the AGL Energy share price

While AGL’s performance in both August and 2021 so far has been rather bleak, things aren’t any better for long-term investors.

In addition to being down 44% year to date in 2021 so far, the AGL share price is also down around 54% over the past 12 months, and 64% over the past 5 years.

Since this company hit its all-time high of around $27.70 a share back in 2017, investors have had to watch AGL shares lose a nasty 75.8% of their value.

In some (perhaps much-needed) better news, investment bank Goldman Sachs still rates AGL with a 12-month share price target of $7.95 a share (albeit with a ‘neutral’ rating). That implies a potential 12-month upside of 18.5%. Even though the broker acknowledges that FY2022 will be a tough year for the company, it still sees “long-term embedded value in AGL’s portfolio”.

The post August hasn’t been a great month so far for the AGL (ASX:AGL) share price appeared first on The Motley Fool Australia.

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• Here’s why the AGL (ASX:AGL) share price is down 6% in a week
• How does the AGL (ASX:AGL) earnings result compare to Origin?
• When was the worst-ever day on the AGL (ASX:AGL) share price chart?
• The AGL (ASX:AGL) share price is underperforming the ASX 200 in 2021
• Top brokers name 3 ASX shares to sell next week

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 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 AMP Ltd (ASX: AMP) share price has been on fire this week. Shares in the Aussie wealth manager are up 6.1% since last Friday’s close and sitting at $1.12 per share.

It’s a bit of positive news in an otherwise bleak run for shareholders. AMP shares have slumped 27.9% in 2021 and have significantly underperformed the S&P/ASX 200 Index (ASX: XJO) in recent times.

So, what’s driving the latest gains for the Aussie wealth manager?

Why the AMP share price is up 6% this week

AMP reported its half-year results on 12 August – just over 2 weeks ago today. A 57% surge in net profit after tax to $181 million was a key highlight of the recent update.

The wealth manager’s assets under management (AUM) grew 8% to $121 billion during the year despite net cash outflows of $4 billion.

AMP’s Board of Directors did not pay an interim dividend. The wealth manager remains focused on capital management and turnaround efforts under new CEO Alexis George.

The AMP share price jumped 3.7% following the result before retracing those gains in recent weeks. However, this week has been a good one for shareholders with the wealth management share once again climbing higher.

Context is definitely important in looking at the latest moves. For one thing, the AMP share price closed at $1.12 per share on Thursday – just above its $1.04 per share 52-week low.

Interestingly, there has been no further updates since the release of the results two weeks ago but a broadly positive earnings season and recent market gains have helped boost momentum. There have also been recent results releases from IOOF Holdings Limited (ASX: IFL) and Platinum Asset Management Ltd (ASX: PTM) which have helped put AMP’s results in context versus industry peers.

Foolish takeaway

Despite the AMP share price climbing 6% higher this week, the wealth manager’s market capitalisation has still slid 25% in the last 12 months.

The post It’s been a good week so far for the AMP (ASX:AMP) share price appeared first on The Motley Fool Australia.

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• Will Delta wreak long-term havoc on ASX shares? This economist says no
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Motley Fool contributor Ken Hall 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 Dusk Group Ltd (ASX: DSK) share price will be one to watch today.

This follows the release of the specialty retailer’s full year results this morning.

Dusk share price on watch after tripling profit in FY 2021

• Total sales up 47.4% to $148.6 million
• Like for like sales growth of 32.7%
• Gross profit up 54.4% to $101.3 million
• Pro forma net profit after tax increased 225.5% to $26.8 million
• Final fully franked dividend of 10 cents per share

What happened in FY 2021 for Dusk?

For the 12 months ended 30 June, Dusk delivered a 47.4% increase in sales to $148.6 million. This was driven by 10 new store openings and like for like (LFL) sales growth of 32.7%. The latter comprises 32.9% LFL store growth and 27% LFL online growth. Online sales now account for 7.5% of total sales.

Underpinning this growth was a 49% lift in Dusk Rewards customers to a record 413,000 and a 12% increase in Average Transaction Value (ATV) to $51. Management advised that the latter reflects the continued shift to higher price points in Home Fragrance product and the refinement of its range to offer larger pack size products across the core candle category.

Another positive that could support the Dusk share price is that its Dusk Rewards members continue to spend more, and shop more often than non-members. This bodes well for the future given its rising membership numbers.

Inventory levels are becoming very important in the current environment for retailers. Dusk appears to have hit a sweet spot with inventory broadly in line with plan. And while this is 67% higher than a year ago, it notes that the company was $2.6 million below plan at the end of FY 2020 due to COVID-19 impacts. Furthermore, the increase is concentrated in high turn core SKUs in Candle and Home Fragrance.

What did management say?

Dusk’s Managing Director and CEO, Peter King, said: “Dusk’s strong FY21 results were generated by agile decision making and focused execution over the period. A 225% increase of both NPAT and EBIT vs FY20 despite lockdowns across multiple States points to the resilient teamwork of the dusk organisation and continued execution of its business plan in a challenging trading environment.”

“While COVID-19 has seen a shift in consumption to home related products, it should be noted that Q3 FY21 was the 17th consecutive quarter of LFL Sales and GM$ growth for dusk. December 2020 itself was the 4th consecutive Christmas of record sales and earnings.”

“Record signups for dusk rewards in FY21 are a clear signal of future purchase intent into FY22 and beyond. To ensure these customers stay with dusk we will continue the laser like focus on our customers by developing and delivering differentiated dusk branded products that offer great value for money and affordable everyday luxury,” he added.

What’s next for Dusk?

One thing that could put pressure on the Dusk share price today was its poor start to FY 2022.

Unfortunately, due to COVID-19 related restrictions and store closures, the company has lost ~35% of potential trading days.

In light of this, for the first seven weeks of FY 2022, top line sales are down 28% or $4.4 million in dollar terms.

However, it highlights that in stores that are open or have re-opened, the company continues to see strong customer conversion rates and elevated average transaction value.

Dusk share price outperformance

Despite pulling back from recent highs, the Dusk share price is still outperforming the market by a significant margin in 2021.

Since the start of the year, the Dusk share price is up an impressive 50%. This compares to a 12% gain by the ASX 200 index.

The post Dusk (ASX:DSK) share price in focus after tripling profit in FY21 appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dusk 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 NextDC Ltd (ASX: NXT) share price will be on the spotlight on Friday after the company released its FY21 results.

NextDC share price in focus following 23% revenue lift

The NextDC share price could be on the move today after the company reported another year of strategic capital investment and set new benchmarks for financial performance. Key highlights included:

• Data centre services revenue increased 23% to $246.1 million.
• Earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose 29% to $134.5 million.
• Operating cash flow surged 148% to $133.2 million.
• The number of customers increased by 13% to 1,547.
• Liquidity of $1.7 billion, including undrawn debt facilities of $1.05 billion, at the end of FY21.

What happened for NextDC in FY21?

The NextDC share price is up 8.97% year to date and 13.2% in the past 12 months, underperforming the broader S&P/ASX 200 Index (ASX: XJO).

Despite the company’s slow-moving share price, NextDC achieved a number of significant milestones and enjoyed a period of strong growth in FY21.

NextDC continued to experience significant growth in the number of customers, customer orders and data centre revenue.

Data centre services revenue for the year increased 23% to $246.1 million, driven by the increased utilisation of data centre services across the business. As at 30 June, the company was billing for 65.3MW of capacity.

NextDC continues to take strides towards profitability, delivering a net loss after tax of $20.7 million compared to a $45.0 million loss in FY20.

NextDC has a strong pipeline of development work to drive its facility capacity and contracted utilisation.

The company cited record development activity in Victoria with 9MW of new capacity built and commissioned on time and on budget at the M2 site. Construction work has now begun for an additional 9MW of capacity, scheduled for delivery during the fourth quarter of FY22.

NextDC said that during FY21, strong demand from customers in NSW and ACT saw the company reach contracted utilisation of 41MW in this region. With its S2 site approaching full capacity, it expects to transition further demand across to S3, which is scheduled to come online during the second half of FY22.

According to NextDC, the company secured critical expansion capacity during FY21 to support the next decade of growth. NextDC secured its single largest landholding to date in Western Sydney for S4 Sydney, targeting a capacity of 300MW. The company also received development approval for M3 Melbourne, securing expansion land for the 150MW campus in West Footscray.

It will be interesting to see how the NextDC share price performs on Friday as investors digest the company’s latest results.

Management commentary

NextDC CEO and managing director Craig Scroggie commented on the FY21 results:

We are pleased to deliver on market expectations, with the Company’s FY21 results coming in ahead of the upgraded guidance provided at the time of NEXTDC’s 1H21 results in February. Today’s results are a testament to the Company’s pursuit of excellence, against a more difficult economic backdrop due to the COVID-19 global
pandemic

What’s next for NextDC?

Another driver for the NextDC share price today could be the company’s forward-looking guidance for FY22.

NextDC said that, based on current operating metrics and expected new customer contracts, it forecasts FY22 to deliver:

• Data centre services revenue between $285 million to $295 million (up 16% to 20% on FY21).
• Underlying EBITDA between $160 million and $165 million (up 19% to 23%).
• Capital expenditure in the range of $480 million to $540 million.

NextDC share price snapshot

The NextDC share price closed Thursday’s session 1.82% lower at $13.48. The company’s shares reached a 52-week high of $14.10 during intraday trading on 9 November last year.

Based on the current NextDC share price, the company has a market capitalisation of around $6.1 billion.

The post NextDC (ASX:NXT) share price on watch after record FY21 performance appeared first on The Motley Fool Australia.

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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 Nearmap Ltd (ASX: NEA) share price has been out of form over the last 12 months.

Since this time last year, the aerial imagery technology and location data company’s shares have lost 30% of their value.

Is the weakness in the Nearmap share price a buying opportunity for investors?

According to a recent note out of Morgan Stanley, its analysts were pleased with the company’s results in FY 2021.

In response, the broker retained its overweight rating and $3.20 price target.

Based on the latest Nearmap share price of $2.16, this implies potential upside of 48% over the next 12 months.

What happened in FY 2021?

Nearmap was on form in FY 2021 thanks largely to a record performance by its North American operations. For the 12 months ended 30 June, Nearmap delivered a 26% increase in annual contract value (ACV) to $128.2 million.

This was underpinned by incremental ACV growth of $21.8 million (or $27.4 million in constant currency), which was driven by a combination of growth in subscriptions and its average revenue per subscription metric.

Another positive from the result was the narrowing of Nearmap’s loss. Thanks to operating leverage, the company recorded a loss after tax of $18.8 million for the year. This was almost half the $36.7 million loss it recorded in FY 2020. This left the company with a cash balance of $123.4 million at the end of the period.

And while no guidance was given with its results, management spoke positively about the future. Nearmap’s Chief Financial Officer, Andy Watt, commented: “Our track record of successfully executing on our growth initiatives gives me the confidence we can successfully capitalise on the strong momentum in our business into FY22 and beyond.”

What did the broker say?

Morgan Stanley highlights that this FY 2021 result was in line with guidance.

And while it notes that no guidance was provided for FY 2022, the broker is confident on its prospects and is expecting its cash burn to reduce.

Its analysts also remain confident that the Nearmap share price could re-rate to higher multiples in the near future once further clarity is gained for its ACV growth and operating leverage.

In light of this, it believes the Nearmap share price is trading at a very attractive level currently.

The post Top broker names Nearmap (ASX:NEA) share price as a buy 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. owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap 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 Wesfarmers Ltd (ASX: WES) share price will be on watch on Friday.

This follows the release of the conglomerate’s full year results this morning.

Wesfarmers share price on watch after delivering strong profit growth

• Revenue from continuing operations up 10% to $33,941 million
• Earnings before interest and tax (EBIT) from continuing operations up 18.8% to $3,776 million
• EBIT (after interest on lease liabilities) up 20.7% to $3,550 million
• Net profit after tax rose 16.2% to $2,421 million
• Operating cash flows down 25.6% to $3,383 million
• Fully franked full year dividend of 178 cents per share, up 17.1% year on year
• Proposed $2.3 billion or $2.00 per share capital return to shareholders

What happened in FY 2021 for Wesfarmers?

Wesfarmers was a very positive performer in FY 2021, delivering a 10% increase in revenue and an 18.8% jump in EBIT from continuing operations. This appears to be in line with expectations, which could bode well for the Wesfarmers share price today.

The key drivers of this growth were its Bunnings and Kmart Group businesses. For the 12 months, Bunnings delivered a 19.7% increase in earnings to $2,185 million and Kmart Group achieved a 69% increase in earnings to $693 million. This was supported by a 7.6% increase in Officeworks earnings and offset slightly by a 2.5% earnings decline by the WesCEF business.

Management advised that Bunnings’ strong growth reflects continued execution of its strategic agenda, the resilience of its operating model, and its capacity to adapt to changing customer needs

Whereas Kmart Group’s positive performance was underpinned by the conversion of Target stores into Kmart stores, higher sales, lower clearance costs, and improvements in the cost of doing business.

This strong form allowed the Wesfarmers Board to declare a fully franked final dividend of 90 cents per share. This brought its full year dividend to 178 cents per share, up 17.1% year on year.

But the shareholder returns aren’t stopping there. Potentially giving the Wesfarmers share price an additional boost today was news that the Board is recommending a return of capital of 200 cents per share to shareholders.

The company notes that this distribution will ensure a more efficient capital structure for the company while maintaining balance sheet capacity to take advantage of value-accretive opportunities as they arise.

What did management say?

Wesfarmers’ Managing Director, Rob Scott, commented: “While COVID-19 had a significant impact on operations during the year, the Group’s businesses maintained their focus on building deeper customer relationships and trust.”

“Bunnings, Kmart Group and Officeworks delivered strong sales and earnings growth for the year. While customer demand remained resilient, sales growth in Bunnings, Officeworks and Catch moderated from mid-March as the businesses began to cycle elevated demand following the onset of COVID-19 in the prior year. Pleasingly, sales growth from mid-March remained strong on a two-year basis across all of the Group’s retail businesses.”

Mr Scott also revealed that its online businesses performed strongly during the year, with online sales now accounting for almost 10% of sales.

He said: “Investment in data and digital capabilities accelerated, and the Group commenced the development of a data and digital ecosystem that will enable a more seamless and personalised customer experience across the retail businesses. Digital engagement across all businesses continued to increase and total online sales across the Group, including the Catch marketplace, increased to $3.3 billion.”

What’s next for Wesfarmers?

One thing that could weigh on the Wesfarmers share price today was its softer start to FY 2022.

The company notes that Bunnings’ sales financial year to date have declined 4.7% on the prior corresponding period. This reflects solid growth from commercial customers, offset by a decline in consumer sales as the business cycled elevated demand in the prior period.

It is a similar story for the Kmart Group business, with combined Kmart and Target sales down 14.3% financial year to date. This reflects the significant impact of COVID-19 restrictions, including government-mandated temporary store closures across a number of regions. It notes that since the beginning of the year and in mid-August almost 50% of stores were closed due to lockdowns. The Catch business has also seen gross transaction value decline 8.5% thus far in FY 2022.

Finally, Officeworks has been a relatively better performer with sales down just 1.5% financial year to date.

No guidance has been given for the year ahead, but management remains positive on the company’s long term prospects.

It commented: “The Group’s strong balance sheet and portfolio of cash-generative businesses with market-leading positions make it well positioned to withstand a range of economic conditions and deliver satisfactory shareholder returns over the long term.”

“The Group will continue to develop and enhance its portfolio, building on its unique capabilities and platforms to take advantage of growth opportunities within existing businesses and to pursue investments and transactions that create value for shareholders over the long term,” it concluded.

Wesfarmers share price performance

The Wesfarmers share price has been in fine form in 2021. Since the start of the year, the company’s shares are up 24%. This is double the return of the ASX 200 over the same period.

The post Wesfarmers (ASX:WES) share price on watch after strong profit growth and $2.3bn capital return appeared first on The Motley Fool Australia.

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• The Wesfarmers (ASX:WES) share price is trading on a forecast 2.78% fully franked dividend yield

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 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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ASX growth shares have beaten value shares for a decade now.

The only exception was a short period earlier this year when value stocks were in favour due to post-COVID inflation fears.

So have growth shares run too hot for too long now? Are they overly expensive and can only go down from here?

The older folks would certainly remember what happened in the early 2000s when the dot-com bubble exploded. That ended in tears for many people.

Is 2021 the same as when the dot-com bubble burst?

BetaShares chief economist David Bassanese set out to answer this question this week.

He used the NASDAQ-100 Index (NASDAQ: NDX), which includes many of the US technology multinationals, as a proxy for growth shares in his analysis.

“The NASDAQ-100 index has performed very strongly in recent years. Looked at from a return perspective alone, this strong relative performance is akin to that seen during the ‘dotcom bubble’ 20 years ago,” he said on the BetaShares blog.

“This time around, however, this solid performance has been well supported by underlying fundamentals, namely strong relative growth in earnings.”

A quick way of judging how expensive shares are in relation to other periods is to look at the price-to-earnings (PE) ratio.

“At least up until recently, the NASDAQ-100’s price to forward earnings (PE) ratio had moved broadly sideways and averaged just under 20,” said Bassanese.

“Since the COVID crisis, however, prices have increased relative to earnings such that the PE ratio has increased – reaching an end-month peak of 30 at end-August 2020. As at end-July 2021, it was trading at a forward PE ratio of 27.2.”

So is a PE ratio of 27 expensive?

Maybe, but it’s nothing like the dot-com bubble days, when it reached 70 and 80.

“Since the mid-1980s, the PE ratio has averaged around 25 – though excluding the bubble years from 1997 to 2004, the average has been only 21,” Bassanese said.

“So in that regard the PE ratio today is 30% above its long-run average excluding the bubble years.”

But are ASX growth shares too expensive vs value stocks?

Bassanese also pointed out that while growth shares might be above their long-term price average, that still doesn’t mean they’re much more expensive than value stocks.

“PE ratios in many markets are elevated these days – helped by very low interest rates, and to an extent, an expectation of a continued strong rebound in corporate earnings following their slump last year.”

For example, the MSCI All Country World Index is 27% above its long-term average since the mid-1980s, excluding the late 1990s bubble period. That’s comparable to the NASDAQ-100’s 30% premium.

Additionally, Bassanese reckons growth in earnings will deflate the current PE ratio or push up share prices further. 

“Current consensus estimates suggest forward earnings for the NASDAQ-100 Index will lift 14% between now and end-2022, which remains a bit more than the 11% growth expectation for global stocks overall,” he said.

“All up, so far at least it’s hard to argue growth stocks – as proxied by the NASDAQ-100 Index – are clearly over-valued, given the current still low level of interest rates and relative to similarly above-average global equity PE valuations more broadly.”

The post Is there any juice left in ASX growth shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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