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Reporting season went up another gear last week when an even larger number of companies released their latest results.

Three of the best results from last week are summarised below. Here’s what they reported:

CSL Limited (ASX: CSL)

Despite facing a number of headwinds, this biotherapeutics giant delivered a full year result ahead of expectations last week. For the 12 months ended 30 June, CSL reported a 9.6% increase in constant currency revenue to US$10,026 million and a 10% lift in profit after tax to US$2,307 million. The latter compares to its guidance of 3% to 8% growth. And while plasma collection headwinds are expected to weigh on its performance in FY 2022, leading to a decline in profit, this was largely expected by the market. Overall, the result went down well with Morgans. In response, the broker retained its add rating and lifted its price target on the company’s shares by 8% to $324.40.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price raced to a record high last week after investors responded positively to its full year results. In FY 2021, the pizza chain operator delivered a 14.6% increase in network sales to $3.74 billion and a 29.2% jump in net profit after tax to $188.2 million. This was driven by new store openings and solid same store sales growth across its ANZ, European, and Asian operations. Positively, FY 2022 has started strongly, with network sales up 7.7% year to date compared to the same period last year. The team at Citi were impressed. In response, the broker retained its buy rating and lifted its price target to $159.05.

Pro Medicus Limited (ASX: PME)

The Pro Medicus share price also jumped to a record high last week following the release of its full year results. In FY 2021, the healthcare technology company delivered a 19.5% increase in revenue to $67.9 million and a 33.7% jump in net profit after tax to $30.9 million. This was driven partly by the implementation of a number of multi-year contract wins from major healthcare institutions. Morgans was happy with its result. It lifted its price target on the company’s shares from $49.00 to $62.00. However, for valuation reasons, it has held firm with its hold rating. The Pro Medicus share price ended the week at $65.85.

The post 3 of the best ASX results from week three of reporting season appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX 200 shares last week
• Brokers name 3 ASX shares to buy today
• CSL (ASX:CSL) share price lifts despite UniSuper divestment threat
• CSL (ASX:CSL) share price charges higher on bullish broker note
• Top brokers name 3 ASX shares to sell 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. owns shares of and has recommended CSL Ltd. and Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Dominos Pizza Enterprises 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 Westpac Banking Corp (ASX: WBC) share price is having an August to make investors smile.

At close of trade on Friday, shares in the Australian big four bank were trading for $25.76 – down 0.23%. For context, the S&P/ASX 200 Index (ASX: XJO) ended 0.03% lower.

Since the beginning of the month however, Westpac shares have risen 4.93% while the benchmark index is 0.85% higher.

This green August comes after a so-so July. The Westpac share price fell 5% the prior month despite a rising overall market.

Let’s see what’s been affecting Westpac this month.

The month so far for Westpac

Shockwaves from the biggest M&A in Australian history, the $39 billion acquisition of Afterpay Ltd (ASX: APT) by Square Inc (NYSE: SQ), may have extended to the Westpac share price.

As Motley Fool previously reported in October last year, Australia’s oldest bank revealed a partnership with Afterpay which would see Westpac provide its banking-as-a-service platform to the buy now, pay later contender.

The offering was expected to be symbiotic – Afterpay gets white-labelled bank accounts and Westpac extracts revenue from the payments shift. However, that was before US-based payments giant Square entered the scene.

Now Westpac has been unnerved by Afterpay shacking up with the competition. Square commands a larger market capitalisation than the Aussie bank, at US$121 billion. The company is making a conscious move to disrupt traditional banks with its business deposits and loans.

Westpac also announced the sale of its life insurance business to Dai-ichi Life Group subsidiary, TAL.

TAL will pay $900 million for the business. It will also enter a strategic alliance to provide Westpac’s Australian customers with the service for another 20 years.

According to Westpac, the divestment “releases significant capital”.

Westpac has lost a total of $1.3 billion (post-tax) on the sale. However, it will add around 12 basis points to Westpac’s Level 2 common equity Tier 1 (CET1) capital ratio. 

The big bank will record a post-tax loss of $300 million for the life insurance business in its financial year 2021 results. The immediate loss mainly relates to transaction and separation costs.  

Westpac share price falls on third quarter update

The Westpac share price slid after the release of its third-quarter update in August.

The bank revealed a CET1 ratio of 12% on a reported basis and 12.5% on a pro forma basis. As a result, the Westpac Board indicated it will consider a further return of capital to shareholders. An update on this will be made with its FY 2021 results later this year.

As well, Westpac gave an unfavourable forecast with its update. The bank once again reiterated that it was facing net interest margin (NIM) headwinds and therefore expected its second-half NIM to be lower than what was achieved in the first half. It also reaffirmed its expectation for its expenses to be higher year-on-year in FY 2021.

Westpac share price snapshot

Over the past 12 months, the Westpac share price has increased by 49.3%. It has outperformed the benchmark ASX 200 by about 27 percentage points. Year-to-date it has risen 31.0% to the ASX 200’s 11.6% lift.

Westpac has a market capitalisation of $94.7 billion.

The post August has been a good month so far for the Westpac (ASX:WBC) share price appeared first on The Motley Fool Australia.

More reading

• These ASX 200 bank experts are forecasting a bumpy ride for our economy
• Westpac (ASX:WBC) share price rises after broker tips $5bn buyback
• Top brokers name 3 ASX shares to buy today
• ASX 200 midday update: Westpac update, Breville and Magellan sink
• Westpac (ASX:WBC) share price falls on margin pressure concerns

Motley Fool contributor Marc Sidarous owns shares of Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. 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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There are some quality ASX shares that may be worth thinking about this weekend.

They are businesses that are producing earnings growth and have reached a strong market share.

These two ideas below may be attractive long-term opportunities if they can keep growing over time:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

This is an exchange-traded fund (ETF) that is about giving investors exposure to 50 of the biggest technology businesses in Asia outside of Japan.

The West has plenty of big technology names like Microsoft, Apple and Amazon. But there are also some giants in Asia (excluding Japan).

Looking at the biggest 10 positions in the portfolio at the last update, they were: Taiwan Semiconductor Manufacturing, Samsung Electronics, Alibaba, Tencent, Sea, Infosys, Meituan, JD.com, Pinduoduo and Naver.

Some of these are the biggest e-commerce retailers and the biggest global gaming businesses. Samsung is one of the biggest smartphone, TV and appliance makers. These are businesses with big market shares.

It has annual management fees of 0.67%. That’s higher than quite a few index-based ETFs but lower than many active managers who charge 1% per annum, or more.

BetaShares Asia Technology Tigers ETF has been falling in recent months. At 31 July 2021 it had fallen 11.3% over the month. It has fallen another 6% since then.

Sometimes a drop in prices can be an opportunity to think about.

Despite that decline, since September 2018 the ASX share has seen an average net return per annum of 23%. But past performance is no guarantee of future performance.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara provides software, its clinical functions for breast screening clinics provide feedback on breast density, compression, dose and quality, while its enterprise-wide practice-management software helps with productivity, compliance, reimbursement, and patient tracking.

The ASX share has the Volpara breast health platform, its AI software platform, which is a suite of software solutions that collects and analyses information to better understand a patient’s breast cancer risk, while evaluating image quality and workflow improvement opportunities.

These capabilities are being extended to lung cancer screening.

The company has managed to increase its coverage of US women being screened to 33% in the three months to 30 June 2021. That was an improvement from 32% in the previous quarter.

Volpara’s annual recurring revenue (ARR) is now around US$19.2 million and client churn is low. In the latest quarter, its average revenue per user (ARPU) was US$1.42. But some sites were seeing ARPU was US$5.87.

The sale of multiple products to new clients is increasing ARPU. Upselling to existing clients is another opportunity for the ASX share to grow ARPU. Volpara continues to look for acquisition opportunities that can improve its offering or grow ARPU.

Its FY22 focus is risk and genetics. Volpara says that it wants to ensure that all women get extremely accurate risk assessment, go onto the right pathways and are monitored with world-class detection.

The post 2 ASX shares that may be worth looking at this weekend appeared first on The Motley Fool Australia.

More reading

• 3 small cap ASX shares to put on your watchlist this week
• BetaShares ASIA (ASX:ASIA) ETF slumps amid China slowdown
• 3 quality ASX growth shares for August
• 3 highly rated ETFs for ASX investors this month
• Expert: Chinese regulation worries could make Betashares Asia Technology Tigers ETF (ASX:ASIA) a buy

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF and VOLPARA FPO NZ. 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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Deteriorating iron ore prices and sharp a selloff in the lithium sector has sent the Mineral Resources Limited (ASX: MIN) share price down 19% in August.

July bulls turned to August bears

Mineral Resources is a diversified mining business, offering the likes of mining services for some of the world’s largest mining companies, in addition to its own commodity portfolio which includes iron ore and lithium.

July was a glorious month for the Mineral Resources share price, rallying to an all-time high of $65.38 and closing the month with a year-to-date return of 68.14%.

The bullish performance of Mineral Resources last month was supported by firm iron ore prices, trading well above US$220/tonne and the surging lithium sector.

ASX lithium shares such as Pilbara Minerals Ltd (ASX: PLS) and Orocobre Limited (ASX: ORE) would mark fresh all-time highs almost on a weekly basis in July and early August, surging to year-to-date returns of well over 100%.

Unfortunately, the opposite is now unravelling.

According to Fastmarkets MB, iron ore prices tumbled US$20.73/tonne on Thursday to an 8-month low of $132.66/tonne.

This means iron ore prices have tumbled more than 40% from May highs of ~US$230/tonne.

Furthermore, ASX lithium shares have taken a sharp turn for worse in the past week, with leading names like Pilbara Minerals and Orocobre down 7% and 6.65% respectively on Friday.

An article from The Motley Fool US flagged that Bank of America slapped an underperform rating on two of the biggest lithium mining companies, Albemarle and Livent.

This could have an impact on the Mineral Resources share price, given the company operates a 40:60 lithium joint venture with Albemarle.

Bank of America said that “both stocks are benefiting from “significant hype” regarding long-term demand for lithium metal, but according to the analyst, they may not be able to deliver on that hype.”

Mineral Resources share price snapshot

The year-to-date performance of Mineral Resources has halved from 68% at the end of July to 31% by Friday, 20 August.

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

More reading

• These were the worst performing ASX 200 shares last week
• What’s going on with ASX lithium shares today?
• Why the Mineral Resources (ASX:MIN) share price fell 15% this week
• Here are the top movers on the ASX 300 today
• The Mineral Resources (ASX:MIN) share price is down 8% on Thursday

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 Commonwealth Bank of Australia (ASX: CBA) reported its earnings for the 2021 financial year (FY21) last week. Not only did CBA report significant growth and a boosted dividend, but the big bank also announced a $6 billion off-market share buy-back. In response, the market pushed the CBA share price to a new record high.

But how did it compare to its smaller, locally focused competitor, Bendigo and Adelaide Bank Ltd (ASX: BEN)?

While the two banks work in the same sector, their businesses and market capitalisation differ significantly. Therefore, it may be a useful exercise to compare how they performed over FY21.

So, how did the CBA earnings stack up against those of Australia’s fifth-largest retail bank? Let’s take a look.

CBA share price soars on FY21 earnings

If you missed CBA’s earnings, here are the highlights of the bank’s FY21:

• Net profit after tax of around $8.84 billion – 19.7% more than that of FY20
• Approximately $8.65 billion worth of cash earnings, up 19.8%
• Net interest margin down 4 basis points to 2.03%
• Common Equity Tier 1 ratio up 150 basis points to 13.1%
• $2 fully franked final dividend
• Off-market share buy-back which is expected to reduce its share count by around 3.5%

As you can see, FY21 was a successful period for CBA, and its share price reacted positively.

The CBA share price gained 1.5% after the bank released its earnings. Not to mention, it hit a record high of $109.03 during intraday trade.

However, it has since fallen 8.2% to trade at $99.27.

How does this compare to Bendigo Bank’s FY21 earnings?

Bendigo Bank released its earnings for the financial year just been slightly after CBA. However, its results weren’t received with the warm welcome CBA’s were. The Bendigo Bank share price slumped by 9.9% in response to its FY21 earnings.

Here’s a sample of what Bendigo Bank reported:

• Statutory net profit after tax of $524.0 million – up 172%
• $457.2 million of cash earnings after tax, 51.5% higher than those of the prior corresponding period
• Net interest margin down 7 basis points to 2.26%
• Common Equity Tier 1 ratio up 32 basis points to 9.57%
• 50-cent fully franked final dividend 

As the Motley Fool Australia reported at the time, while Bendigo Bank recorded exceptional growth, its net interest margin and common equity tier ratio likely let it down.

While the CBA earnings also outlined a decreased net interest margin, it was a far lesser drop.

All in all, both banks reported significant growth in profits and earnings, with CBA bringing up the comparative rear.

CBA share price snapshot

Despite the market’s enthusiastic reception to the CBA earnings, the bank’s shares have since dipped.

Right now, the CBA share price is 18% higher than it was at the start of 2021. It has also gained 42% since this time last year.

The post How does the CBA (ASX:CBA) earnings result compare to Bendigo Bank? appeared first on The Motley Fool Australia.

More reading

• What’s moving the CBA (ASX:CBA) share price this week
• These ASX 200 bank experts are forecasting a bumpy ride for our economy
• The Macquarie Group (ASX:MQG) share price just hit an all-time high!
• CBA (ASX:CBA) share price higher on StepPay BNPL launch
• Why Breville, CBA, Magellan, & Sezzle shares are tumbling lower today

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. 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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Weakness in the resources sector weighed heavily on the S&P/ASX 200 Index (ASX: XJO) last week. This led to the benchmark index falling 2.2% over the five days to end at 7,460.9 points.

Thankfully, not all shares dropped with the market. Here’s why these were the best performers on the ASX 200 last week:

Pro Medicus Limited (ASX: PME)

The Pro Medicus share price was the best performer on the ASX 200 last week with a gain of 17.5%. Investors were buying the healthcare technology company’s shares following the release of a solid full year result. In FY 2021, Pro Medicus reported a 19.5% increase in revenue to $67.9 million and a 33.7% jump in net profit after tax to $30.9 million. Strong demand for its technology from major healthcare institutions has been driving its growth. The Pro Medicus share price is now up 93% year to date.

Kogan.com Ltd (ASX: KGN)

The Kogan share price wasn’t far behind with a gain of 15.1%. This is despite there being no news out of the ecommerce company. However, with one of its peers releasing a strong result, investors may be expecting something similar next week from Kogan. That peer was Redbubble Ltd (ASX: RBL), which reported a 58% revenue increase to $553 million. And thanks to operating leverage, Redbubble swung from a loss of $9 million in FY 2020 to a profit of $31 million in FY 2021.

Chorus Ltd (ASX: CNU)

The Chorus share price was on form and jumped 12% over the five days. This followed the release of the NZ Commerce Commission’s draft regulatory asset base (RAB) decision for its fibre business. The draft decision values Chorus’ fibre network at NZ$5.427 billion. This is important as the value of the network is a key building block in determining the revenues Chorus can earn over the first three years of the new regulatory regime starting 1 January.

Domain Holdings Australia Ltd (ASX: DHG)

The Domain share price was a strong performer and rose 11.1% last week. This was driven by the release of the property listings company’s full year results. For the 12 months ended 30 June, Domain reported a 66% increase in net profit to $37.9 million. Domain also revealed that its unique digital audience increased to a record of more than 9 million during the year. This went down well with UBS, which upgraded its shares to a buy rating with an improved price target of $5.70.

The post These were the best performing ASX 200 shares last week appeared first on The Motley Fool Australia.

More reading

• These were the worst performing ASX 200 shares last week
• How is the ASX 200 Index (ASX:XJO) share list compiled?
• Here are the top 10 ASX 200 shares today
• Why Adairs, Redbubble, Treasury Wine, & Western Areas are storming higher
• Kogan.com (ASX:KGN) share price jumps ahead of full-year results

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 Kogan.com ltd and Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and Pro Medicus 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 S&P/ASX 200 Index (ASX: XJO) was out of form last week due largely to weakness in the resources sector. This led to the benchmark index falling 2.2% over the five days to end at 7,460.9 points.

While a good number of shares tumbled lower, some fell more than most. Here’s why these were the worst performing ASX 200 last week:

Lynas Rare Earths Ltd (ASX: LYC)

The Lynas share price was the worst performer on the ASX 200 last week with a disappointing 18.2% decline. This appears to have been driven by profit taking and a pullback in a range of commodity prices. It is also worth noting that last month Ord Minnett put a lighten rating and $4.30 price target on its shares. This compares to the current Lynas share price of $6.33. The Lynas share price is still up 59% since the start of the year despite this decline.

Sims Ltd (ASX: SGM)

The Sims share price wasn’t far behind with a decline of 17.4% over the five days. This is despite the scrap metal company delivering earnings ahead of its guidance range in FY 2021. Though, one broker that wasn’t overly impressed was UBS. In response to the result, the broker downgraded the company’s shares to a neutral rating and cut the price target on them to $17.30.

Mineral Resources Limited (ASX: MIN)

The Mineral Resources share price was out of form and tumbled 17% lower last week. This decline appears to have been driven by a sharp pullback in iron ore prices last week. The spot iron ore price crashed 15% on Friday to US$130.2 a tonne. This meant it was down approximately 45% from the record high of US$237.57 it reached in May. The Mineral Resources share price is still up 36.2% year to date.

BHP Group Ltd (ASX: BHP)

The BHP share price was a disappointing performer and dropped 16% over the five days. This was driven by a combination of the weakness in iron ore prices and the mining giant’s full year results. Although BHP delivered earnings in line with expectations and a dividend ahead of estimates, investors appear disappointed with its plan to merge its oil and gas operations with Woodside Petroleum Limited (ASX: WPL). Some analysts saw these operations as a key growth driver in the future.

The post These were the worst performing ASX 200 shares last week appeared first on The Motley Fool Australia.

More reading

• How is the ASX 200 Index (ASX:XJO) share list compiled?
• Here are the top 10 ASX 200 shares today
• Which ASX companies are ending the week as the biggest movers today?
• What’s going on with ASX lithium shares today?
• ASX 200 midday update: Cochlear & TPG sink, Inghams jumps

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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Just yesterday, Sydney Airport Holdings Pty Ltd (ASX: SYD) released its FY21 first-half result to the ASX. The airport operator reported a decline in passenger numbers, after which its share price took a downward turn.

Meanwhile, Auckland International Airport Limited (ASX: AIA) also delivered its FY21 earnings on Thursday, announcing a full-year underlying loss. Its share price also edged slightly lower on the result for the day.

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

It’s no secret that COVID-19 has impacted the aviation market like never before. However, all eyes are on how quickly the airport operators can reopen and rebound to pre-pandemic levels.

Below, we take a look at how Sydney Airport’s recent results stack up against Auckland Airport.

How has Australia’s biggest airport been performing?

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

• Total revenue of $351 million, down 31.3% on the prior corresponding period;
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $210.8 million, down 29.8%;
• Loss after income tax expense of $97.4 million, up 81.7% (H1 HY20 $53.6 million loss); and
• No interim dividend declared.

The weak result came as 6 million total passengers were recorded for the period. This represented a 36.4% drop.

Yesterday, Sydney Airport shares fell 0.26% to end Friday’s session at $7.70.

How does this compare to the Auckland Airport earnings result?

Auckland Airport revealed its own numbers on Thursday, highlighting the struggling travel market. Here’s a recap on the company’s performance for the 12 months ending 30 June 2021:

• Total revenue of NZ$281.1 million (A$267.46 million), down 50.4% on the prior corresponding period;
• Earnings before interest, tax, depreciation, fair value adjustments and investments in associates (EBITDAFI) of NZ$171.5 million (A$163.19 million), down 45% on the prior year;
• Underlying net loss after tax of NZ$41.8 million (A$39.77 million), down 122.2% on the prior year; and
• No full-year dividend declared.

Auckland Airport recorded a stark fall in passenger numbers as a result of the COVID-19 border restrictions. In total, 6.4 million passengers walked through, reflecting a 58.5% drop on the previous financial year.

After dipping following the announcement on Thursday, the company’s shares bounced back yesterday. At the closing bell on Friday, Auckland Airport shares were up 2.69% to $6.87.

Comparing the two companies’ performance and financial reports, there are similarities in terms of total passengers, and cash earnings. Both Sydney Airport and Auckland Airport fell in revenue, and posted a loss while declaring no dividend.

Given the uncertain market, neither company dished up an earnings guidance for the foreseeable future.

However, the travel industry is forecast to fully recover in the coming years as COVID-19 vaccinations are rolled out. 

Sydney Airport share price snapshot

It’s been a challenging 12 months for Sydney Airport shares. Although posting a 40% gain over the period, the company has faced severe disruptions within the travel industry.

In mid-July, the Sydney Airport share price rocketed following a takeover bid by a consortium of infrastructure investors. Since then, the airport operator has received a new offer from the Sydney Aviation Alliance, valuing its shares at $8.45 apiece.

Based on today’s price, Sydney Airport commands a market capitalisation of $21 billion, with approximately 2.7 billion shares on issue.

The post How do the Sydney Airport (ASX:SYD) results compare to Auckland Airport? appeared first on The Motley Fool Australia.

More reading

• The ASX reporting wrap-up: Cochlear, Sydney Airport, TPG
• ASX 200 midday update: Cochlear & TPG sink, Inghams jumps
• Sydney Airport (ASX:SYD) share price slumps as losses skyrocket by 80%
• 5 things to watch on the ASX 200 on Friday
• ASX 200 edges lower, Cochlear sinks, Inghams rises

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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If you’re an investor in, or at least have an abiding interest in, ASX shares, you will have no doubt heard of the S&P/ASX 200 Index (ASX: XJO).

The ASX 200 is the ASX’s most prominent share market index, and is frequently quoted alongside the older All Ordinaries Index (ASX: XAO) as an all-encompassing benchmark for the Australian share market.

If someone says, “the ASX was down 2% yesterday”, they are probably talking about the ASX 200.

But how exactly are the shares in this list compiled to give us such a good read on the share market as a whole?

It’s more complicated than you might think.

So to start off with, let’s get the elephant out of the room. Yes, the ASX 200 has… 200 companies within it. These companies represent the 200 largest shares on the ASX boards by market capitalisation. So size does matter when it comes to how this list is compiled.

So apart from market capitalisation, what other requirements need to be filled for a company to appear on the ASX 200?

How does the ASX 200 work?

Well, according to S&P Global, the company which operates the ASX 200 Index, there are a few other considerations as well. These include liquidity and whether the company is domiciled in Australia.

Investment vehicles that primarily invest in other companies’ shares, such as exchange-traded funds (ETFs), listed investment companies (LICs) or managed funds, are generally not eligible for inclusion in the ASX 200.

When determining a company’s market capitalisation, obviously this can change day to day, sometimes dramatically. As such, S&P Global uses the “daily average market capitalisation of a security over the last six months” to determine a longer-term average.

Every 3 months, the ASX 200 is rebalanced, which means that it is readjusted based on each of its constituents’ updated market capitalisations and other eligibility criteria. This inevitably means that every 3 months, some companies are kicked out of the ASX 200 and replaced with new entrants.

For example, the ASX 200’s latest rebalance was effective on 21 June 2021. This saw Orocobre Limited (ASX: ORE) added to the ASX 200, whilst Resolute Mining Limited (ASX: RSG) was kicked out.

But of the top 200 companies are selected for the ASX 200, how are they then apportioned? Well, it’s not equal. In a market capitalisation-weighted index, each company is assigned a ‘weighting’ based on its size. Thus, the larger companies (such as the ASX banks or BHP Group Ltd (ASX: BHP) are assigned a larger weighting than the smaller ones, such as Zip Co Ltd (ASX: Z1P).

What do the top ASX 200 shares look like today?

Here is a look at the ASX 200’s current 10 largest companies, and their respective ASX 200 weightings (the latter according to BlackRock):

ASX 200 Share	Current Market Capitalisation	ASX 200 Weighting
Commonwealth Bank of Australia (ASX: CBA)	$176.02 billion	8.29%
BHP Group Ltd (ASX: BHP)	$131.59 billion	6.58%
CSL Limited (ASX: CSL)	$137.82 billion	6.26%
Westpac Banking Corp (ASX: WBC)	$94.72 billion	4.44%
Australia and New Zealand Bnking GrpLtd (ASX: ANZ)	$80.73 billion	4.27%
National Australia Bank Ltd (ASX: NAB)	$90.71 billion	3.8%
Wesfarmers Ltd (ASX: WES)	$74.82 billion	3.45%
Macquarie Group Ltd (ASX: MQG)	$60.84 billion	2.61%
Woolworths Group Ltd (ASX: WOW)	$52.6 billion	2.46%
Telstra Corproation Ltd (ASX: TLS)	$47.21 billion	2.21%

Size does matter…

As you can see, the weightings generally correspond with each company’s market cap. Of course, this isn’t always perfect. You can see that BHP currently has a larger weighting than CSL, even though it has a smaller market cap as it stands today.

BHP shares have fallen steeply over the past week or so. But as the ASX 200 is only rebalanced every 3 months, we will have to wait until the next rebalance to see this new paradigm reflected in the weighting. That’s assuming BHP’s market cap remains below CSL’s until then, of course.

So now you know how the ASX 200 sausage is made, so to speak. It’s a complicated business, but one that ends up giving us an easy and fairly accurate glimpse of how the entire ASX share market is performing at any given time.

The post How is the ASX 200 Index (ASX:XJO) share list compiled? appeared first on The Motley Fool Australia.

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• ASX 200 midday update: Cochlear & TPG sink, Inghams jumps
• 5 things to watch on the ASX 200 on Friday
• ASX 200 drops, Redbubble soars, TWE falls

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited and Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Telstra Corporation Limited, and 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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A record FY21 result has helped double the Adairs Ltd (ASX: ADH) dividend for FY21.

The company’s strong financial and operational result witnessed a 10.3% surge to $4.07 within the first hour of trade before selling pressure would see it close 1.63% higher to $3.75.

Despite a relatively weak intraday performance, investors can look forward to a generous Adairs dividend.

How did Adairs perform in FY21?

Adairs delivered a record financial performance in FY21, with highlights including:

• Group sales rose 28.5% against the prior corresponding period (pcp) to $499.8 million
• Group online sales increased 33.2% to $187 million, representing 37.4% of total sales
• Group underlying earnings before interest and tax (EBIT) surging 97.3% to $109.1 million
• Statutory net profit after tax (NPAT) lifting 80.7% to $63.7 million

However, its FY22 update and forecasts painted a cautionary tone against the record levels it achieved in FY21.

The company said that in the first 7 weeks of FY22, total group sales were down 11.7% compared to FY21. While in dollar terms, group sales for the period were lagging approximately $7 million against prior-year figures.

In addition to weaker sales so far this year, the company also expects gross margins to moderate from record FY21 levels.

Adairs dividend more than doubles in FY21

Adairs Chair Brett Chenoweth commented on the increase in shareholder returns:

Given the underlying NPAT achieved in FY21 and the strong cash generation of the business, I am pleased to advise that the Board have declared a final fully franked dividend of 10.0 cents per share. This takes the total dividend payout for the year to 23.0 cents per share.

This represents a 109% increase compared to the 11 cents per share paid out in FY20.

Adairs dividend key dates

The Adairs share price will go ex-dividend on Wednesday, 8 September and paid out on Thursday, 23 September.

The post The Adairs (ASX:ADH) dividend more than doubled in FY21 appeared first on The Motley Fool Australia.

More reading

• Why Adairs, Redbubble, Treasury Wine, & Western Areas are storming higher
• Adairs (ASX:ADH) share price surges 9% on record FY21 result
• How did the Adairs (ASX:ADH) share price respond last earnings season?
• 2 buy-rated ASX dividend shares for income investors
• 2 retail ASX dividend shares with large yields

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 recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. 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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