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ASX cannabis shares put in a mixed performance in the 2021 financial year (FY21).

Of the 9 stocks broadly falling into the ‘ASX cannabis share’ category, 6 saw their share prices fall while 3 gained in FY21.

Creso Pharma Ltd (ASX: CPH) was the top performer in FY21, gaining 352%.

Cann Group Ltd (ASX: CAN) came in near the bottom of the list, with shares falling 57%.

Unlike stocks producing other commodities – from gold to almonds – the price of marijuana doesn’t impact companies involved in medicinal and recreational cannabis production nearly as directly.

There are numerous factors that determine any listed company’s share price. These include quality of management, debt levels, market growth outlook, and barriers to entry for any would-be competitors, to name a few.

But you just need to look at how ASX gold shares perform during a time of rising gold prices relative to a time of falling gold prices (as we’ve experienced recently) to see the price of gold has a strong impact on their share prices.

The march to legalisation

Cannabis, however, is a rather unique commodity, in that it remains illegal across much of the world.

With that in mind, ASX cannabis shares, and indeed pot stocks across the world, tend to do well when the global legal market expands as the stigma of illegality is gradually stripped away.

As you’re likely aware, the illicit nature of cannabis has been inexorably changing, led by Uruguay.

Yes, Uruguay.

In 2013 the tiny South American nation became the first on Earth to fully legalise cannabis. Since then, Canada and many states in the US have followed suit, with Mexico debating similar legislation.

A potential $63 billion market by 2025

Online investment platform eToro’s market analyst Josh Gilbert points to a forecast by JPMorgan that estimates legal cannabis sales could hit US$45 billion (AU$63 billion) by 2025.

Gilbert told the Motley Fool this “will see most cannabis stocks scrabbling for market share. As cannabis sales increase, the sector is becoming more and more saturated”.

While legal recreational use is a growing segment, the medicinal properties of cannabis are helping drive wider global acceptance.

“The plant’s contribution to pain relief, cancer treatment and other medical issues has been well researched and documented, and a booming industry has started to grow around it,” Gilbert said.

With New York slated to green-light recreational marijuana use in 2022, the global cannabis market is growing like a weed.

A US listed pot stock to consider

Gilbert points to Canopy Growth Corp (NASDAQ: CGC) as an international share that could do well in an expanding legal cannabis market:

The largest cannabis stock by market cap, Canopy Growth, has arguably positioned itself to benefit from the flourishing legalisation of cannabis, by focusing on target countries such as Canada, the US and Germany.

With Canada having fully legalised recreational marijuana alongside its medicinal uses, companies have been turning to infusing food and drinks with THC, the active ingredient that gets users “high”. Gilbert said that edibles and beverages accounted for 47% of Canopy Growth’s sales in FY21.

He added:

Canopy Growth is in the prime position to benefit from all use of cannabis products, whether that is medicinal or recreational. Its financial position provides an advantage against its peers, thanks to its partnership with Constellation Brands in the US. Constellation Brands owns around 38.6% of Canopy Growth, which has helped grow its beverage business and further enhance its potential for profitability.

Revenues are also continuing to grow, with its FYQ1 earnings in August 2021 demonstrating a 23% increase year-over-year. Despite this, the company’s revenues came in short against analyst expectations.

Up 1.2% over the past 12 months, Canopy’s share price is down 37% year-to-date. Gilbert says this is an important reminder “that investing in cannabis stocks doesn’t come without its risks”.

He added: “The industry has also experienced a long run of underperformance, but further legalisation of cannabis globally should be the catalyst for share price growth.”

How have these 2 ASX cannabis shares been tracking in FY22?

Now let’s get back to the 2 ASX cannabis shares mentioned above.

We know how they performed in FY21, the financial year ending 30 June. So how have they done since the start of FY22?

Creso Pharma, the top performer last financial year, is down by 11% since the opening bell on 1 July.

Cann Group, one of the worst-performing ASX cannabis shares in FY21, is continuing to struggle in the new financial year, with shares down by 24% since 1 July.

These ASX cannabis shares, among others, will certainly be eyeing the potential market growth as more US states, and potentially more nations, move to legalise medicinal and recreational marijuana.

The post ASX cannabis shares eyeing $63 billion in legal global sales appeared first on The Motley Fool Australia.

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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 Western Areas Ltd (ASX: WSA) share price is among the best performers on the Australian share market again on Friday.

In afternoon trade, the nickel producer’s shares are up 10% to $3.08.

This means the Western Areas share price is now up 25% over the last two trading sessions.

Why is the Western Areas share price rocketing higher?

The catalyst for the rise in the Western Areas share price has been news that it is a potential takeover target of another ASX-listed miner.

According to an announcement on Thursday, the company has entered into change of control talks with battery materials producer IGO Ltd (ASX: IGO).

It commented: “Western Areas confirms that it is in preliminary discussions with IGO Limited in relation to a change of control proposal and the basis upon which engagement and due diligence between the parties could proceed.”

However, it also warned: “Given the preliminary stage of discussions, there can be no assurance whether any transaction will eventuate or what the terms and conditions of any such transaction might involve. Western Areas will continue to keep shareholders updated as appropriate.”

What else is driving its shares higher?

Also potentially giving the Western Areas share price a lift today was news that Wyloo Consolidated Investments has become a substantial shareholder. Wyloo is part of Andrew “Twiggy” Forrest’s Tattarang Group.

The initial substantial holder notice reveals that Wyloo became a substantial holder on Thursday with a 5.3% stake.

Judging by the Western Areas share price reaction today, investors appear to believe this could be the start of a bidding war. Alternatively, it could be building up a position in order to block a takeover.

Mr Forrest’s Wyloo Metals business is currently using its 37.5% stake in Noront Resources to block BHP Group Ltd (ASX: BHP) from acquiring the Canadian nickel-copper miner.

Neither Wyloo or Western Areas have commented on the substantial shareholder notice.

The post Western Areas (ASX:WSA) share price jumps 10% after Twiggy Forrest buys stake 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 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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It has been a week of losses for the Zip Co Ltd (ASX: Z1P) share price. This afternoon is no exception for the underwhelming week that has been.

Shares in the buy now, pay later company are trading 2.65% lower to $6.98 in afternoon trade. The continued weakness takes the total losses for the week to 11%, underperforming the benchmark index. For reference, the S&P/ASX 200 Index (ASX: XJO) is down approximately 2.1% over the past week.

Let’s review the past week’s past events.

What’s been influencing the Zip share price?

Although there haven’t been any direct announcements from or concerning Zip, there are a few items over the past week that could be weighing on the Afterpay Ltd (ASX: APT) competitor.

Firstly, as we covered earlier in the week, the Zip share price continues to feature in the 10 most shorted ASX shares.

More specifically, the payments company landed at the third spot on the list with a 10.1% short interest. Though, this has been falling over the last few weeks. It seems short-sellers are less daring with merger and acquisition activity appearing in the BNPL sector.

Additionally, The AFR reported on some data that may have frightened BNPL investors. This data regarded the level of bad debts or receivables impaired compared to revenue for some of ASX’s big names in instalments. Reportedly, impaired receivables as a percentage of revenue are as follows:

• Afterpay at 17.3% with $72.1 million in impairments expense
• Zip at 18.3% with $29.5 million in impairments expense
• OpenPay at 46% with $7.9 million in impairments expense

Lastly, Zip revealed it will be reporting its results for the financial year ended 30 June 2021 on Wednesday 25 August 2021.

Typically share prices are quite volatile when a company reports its earnings — a 10% movement or more is not all too uncommon. As such, anyone that might be feeling a little iffy on the upcoming results could be taking some risk off the table this week.

What do brokers think?

Analysts over at Citi are still expecting upside in the Zip share price ahead. The broker recently retained its buy rating with a price target of $8.90.

Further to this, the broker is bullish on the company’s US business, Quadpay.

Despite the recent weakness, the Zip share price is up 7% over the past year. At the time of writing, Zip hold’s a market capitalisation of $3.92 billion.

The post Here’s why the Zip (ASX:Z1P) share is down 11% in a week 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. 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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AGL Energy Limited (ASX: AGL) has an incredible lineage that spans three different centuries. Originally formed as The Australian Gas Light Company in 1837, what we know as AGL Energy today has weathered many storms. As you might suspect, that means the AGL share price has had its fair share of highs and lows.

While its listed life began in 1871 on the Sydney Stock Exchange, the company went on to hit the ASX in 2006. Since then, investors have been a part of a bumpy ride. Over the course of the past 12 months, the AGL share price has eroded 53.4% in value.

Despite its long life on the markets, many would be surprised to know that AGL’s worst-ever day on the ASX wasn’t all too long ago.

AGL share price’s worst day ever

The worst day for the AGL share price occurred only a little more than a month ago on June 30, when it fell 9.99%.

It began with an announcement before the market opened. The announcement was titled ‘Update on demerger, dividend actions and earnings guidance’.

Investors weren’t too pleased with what was contained in that release. The company provided more detail around its intention to demerge and be listed as two separate entities on the ASX — which all seemed fairly straightforward.

Where it might have gone off track for shareholders is when AGL mentioned it would be terminating its special dividend program. This meant the scrapping of the additional 25% of underlying profit after tax paid out in the form of a dividend in FY21 and FY22. The news was likely a massive blow to income-focused investors of AGL, leading to a selloff in the share price.

In short, the board made the decision to preserve roughly $400 million to $500 million in cash heading into the demerger. Though it sounds like a good plan on paper, shareholders know not everything goes to plan.

Adding another blow to the AGL share price, it was revealed the company also expected underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) to be within the lower half of its previous guidance.

Furthermore, for investors that had been hoping for a turnaround in the business, water was poured on that fire. AGL suggested a “material step-down” in earnings for FY22 as lower wholesale electricity prices of the past two years are realised.

From then to now

Since the AGL share price suffered its worst day on the ASX things haven’t gotten much better. On 12 August 2021, the company reported its full-year results for FY21, which was met with disappointment.

According to the release, AGL’s revenue dropped 10% compared to the prior year and underlying profits sank 33.5% to $537 million.

Perhaps expectedly, the AGL share price has gone on to fall a further 11% since its worst day.

At the time of writing, shares are swapping hands at $7.19 apiece, a fall of 0.14% on yesterday’s closing price.

The post When was the worst-ever day on the AGL (ASX:AGL) share price chart? 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 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 Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is slumping lower this morning. That’s after the company posted its financial results for the 6-months ending 30 June 2021.

At the time of writing, shares in Australia’s gateway airport are down 0.13%, trading for $7.71. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has started the day up 0.46%.

Let’s take a closer look.

Sydney Airport share price in focus after revenue drops 30%

• Net loss after tax benefit of $97.4 million. This is up 81.7% on the prior corresponding period’s (pcp) loss. This includes a 36% drop in aeronautical revenue and a 40.6% plunge in retail revenue.
• Revenue down 31.3% on the pcp to $351 million.
• Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $210.8 million – a 29.8% loss on the pcp.
• A negative cash flow of $565.5 million for the 6 months.

What happened in the first 6 months for Sydney Airport?

The biggest drag on Sydney Airport’s financials – and the Sydney Airport share price – for the period is undoubtedly the COVID-19 pandemic. Overall passenger numbers declined 36.4% on the pcp – including a 91% plunge in international arrivals.

A brief glimmer of hope came about in April when the Trans-Tasman travel bubble between Australia and New Zealand opened up. Before the pandemic, New Zealand was the number 2 departure spot for wannabe tourists in Oz. As quickly as hope appeared, it vanished. The New Zealand government, along with every state and territory, shut their borders to NSW as the state’s delta outbreak began to take hold. The first cases and initial border restrictions occurred at the end of the period.

What did management say?

Sydney Airport CEO, Geoff Culbert, said

It was a challenging six months, but we were encouraged to see passenger traffic rebound strongly every time borders were open. From January to April, we recovered to 65% of our pre-COVID domestic passengers and in just over two months between late April and June, trans-Tasman traffic recovered to more than 40% of pre-COVID levels.

We’re optimistic that this trend will repeat itself as the vaccine program gains momentum and we see a sustained easing of restrictions.

What’s next for Sydney Airport

The biggest story affecting the Sydney Airport share price at the moment is the attempt to take over the business by a consortium of infrastructure investors. Twice the consortium has tried to buy all the shares in the company and twice it has been rebuffed by the board.

On the second attempt, the board gave the following rationale.

In coming to this conclusion, the current environment does not change the Boards’ view of the long-term value. The Boards also note the rapid increase and acceleration in Australian vaccination rates in recent weeks and the governments’ plans to progressively ease restrictions as the population reaches vaccination targets which will then see the re-opening of travel.

Sydney Airport share price snapshot

Over the past 12 months, the Sydney Airport share price has increased 47.1%. This has been driven mostly by the initial takeover attempt. Its share price has still not recovered since the March 2020 coronavirus selloff.

Sydney Airport has a market capitalisation of approximately $20.8 billion.

The post Sydney Airport (ASX:SYD) share price slumps as losses skyrocket by 80% appeared first on The Motley Fool Australia.

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

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The Inghams Group Limited (ASX: ING) share price is climbing on Friday after the company reported its latest full-year result.

In early trade, shares in the poultry producer are up 7.6%, trading at $4.19.

Inghams share price flies as net profit doubles

Ingham’s this morning provided its results for the year ended 30 June 2021 (FY21). Some of the key takeaways include:

• Revenue up 4.4% on the prior corresponding period (pcp) to $2,668 million
• Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 9.6% on pcp to $448.7 million
• Statutory net profit after tax (NPAT) up 107.7% on pcp to $83.3 million
• Total dividends up 17.9% on pcp to 16.5 cents per share, representing a 71% payout ratio.

The Inghams share price is climbing higher on the result with investors bidding up the Aussie food producer’s shares in early trade.

What happened in FY21 for Inghams?

Ingham’s reported core poultry volume growth of 4.2% with overall trading volume now ahead of COVID-19 trading levels.

Solid sales volumes throughout the year underpinned this morning’s earnings figures. This, combined with operational efficiencies, net feed cost benefits and frozen poultry inventory reductions, helped boost earnings.

Ingham’s reported solid performance across each of its Retail, QSR, Food Service and Wholesale segments. Australian export volumes were lower in part due to the impact of bird flu in some farms outside the Inghams network.

What did management say?

CEO and managing director Andrew Reeves was positive in today’s release, saying:

These strong financial results are underpinned by solid poultry volume growth and a recovery across the majority of our key channels during the year.

Operationally, we are in a strong position and our optimisation strategy has made a positive contribution to the results we have delivered.

What’s next for Inghams and its share price?

Inghams is focused on its optimisation program including 320 improvement project opportunities in FY22. The company’s Auckland processing facility is also scheduled for completion by 31 December 2021.

The Inghams share price was up 23.0% prior to Friday’s open and is outperforming the S&P/ASX 200 Index (ASX: XJO) in the year to date.

The post Inghams (ASX:ING) share price leaps 7% as FY21 profits double appeared first on The Motley Fool Australia.

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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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It has been a painful week for the BHP Group Ltd (ASX: BHP) share price following the collapse of iron ore prices and the release of the company’s highly anticipated FY21 results.

Buy the rumor, sell the news

The BHP share price was up a solid 24.5% year to date in the week prior to its FY21 results being released.

Shares in the iron ore major closed at $52.81 last Friday, even though iron ore prices had already collapsed below ~US$170/tonne.

BHP released its FY21 results on Tuesday 17 August. On that day shares fell 1.42% to $51.33.

But this was just the beginning of the harsh correction.

The BHP share price would free fall 8.06% on Wednesday to $47.70 and slide another 6.35% on Thursday to a 5-month low of $44.67.

It seemed the market anticipated record earnings due to sky-high iron ore prices for most of FY21. And instead, it used this as an opportunity to sell.

The BHP share price has tumbled 14.21% this week, with its year-to-date return shrinking to just 3.74%.

What else is driving the BHP share price lower?

BHP has acknowledged the potential challenges ahead, with its economic and commodity outlook report citing:

…the increasing likelihood of stern cuts to steel output in China in the current half year, as affirmed by China’s peak industry body in early August, is testing the bullish resolve of the futures markets. Prices have decreased materially in late July and early August, but they remain extremely high relative to history at around $160/t at the time of writing.

Going forward, we expect that, in addition to structural market based drivers, safety and environmental inspections are likely to have a material influence on the average level and seasonal volatility of Chinese domestic iron ore production. 

The volatility in iron ore price could drive uncertain performance in the BHP share price in FY22.

The post BHP (ASX:BHP) share price slides for 4th straight session, down 14% this week 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 Newcrest Mining Ltd (ASX: NCM) dividend just increased for a sixth consecutive year thanks to higher copper and gold prices.

The mining giant released an encouraging FY21 result on Thursday, when its share price closed 1.07% higher to $25.54.

How did Newcrest perform in FY21?

Contrary to the performance of the Newcrest share price, which is down 5% year-to-date, the company delivered a well-rounded financial performance with key highlights including:

• Revenue up 17% on the prior corresponding period (pcp) to $4.6 billion.
• Earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased 33% to $2.4 billion.
• Underlying and statutory profit of $1.2 billion. Underlying profits increased 55% and statutory profit surged 80%.
• Basic earnings per share (EPS) of US $1.425 — up 71% on the pcp.
• Gold production of 2.1 million tonnes and record copper production of 142.7 thousand tonnes.
• Realised gold price up 17% to US$1,796/oz.
• Realised copper price up 42% to US$3.66/lb.

The company also advanced a number of organic growth options at its flagship Cadia gold and copper mine in New South Wales, as well as emerging mines Red Chris in Canada and Havieron in Western Australia.

Newcrest dividend more than doubles in FY21

Newcrest managing director and CEO Sandeep Biswas commented on the increase in shareholder returns:

Our dividend policy targets total dividends for a financial year to be in the range of 30-60% of that financial year’s free cashflow, with a minimum annual dividend of US 15 cents per share. Given our record free cash flow generation for FY21, strong balance sheet and positive outlook the Board has approved a final dividend of US 40 cents per share, which is 129% higher than last year’s final dividend. This equates to a record total full-year dividend of US 55 cents per share which represents a 41% payout of FY21’s free cashflow and marks our sixth consecutive year of increasing dividends to shareholders.

Newcrest dividend key dates

The Newcrest share price will go ex-dividend on Thursday, 26 August, and be paid out on Thursday, 30 September.

Shares in the mining giant suffered a drop in early trade today, down 2.23% to $24.97.

The post The Newcrest (ASX:NCM) dividend boosted 129% 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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ASX accounting software developer Xero Limited (ASX: XRO) has been one of the top-performing shares to own over the past 12 months. In that time, the Xero share price has risen well over 50% (to $147.89, as at the time of writing). With a market cap of almost $22 billion, it is now larger than ASX stalwarts like REA Group Limited (ASX: REA) and Woodside Petroleum Limited (ASX: WPL).

Let’s take a quick look under the hood to see what has got the Xero share price zooming higher over the past year.

Company background

Xero develops cloud-based software that helps small and medium-sized business manage their day-to-day accounting. Xero’s platform allows users to perform a range of vitally important tasks, such as generating invoices and purchase orders, tracking payments, managing payroll, and calculating GST returns. The software can also create insightful reporting and analysis on the business’ performance.

Xero operates a software-as-a-service (SaaS) business model. This means that, instead of selling the software itself, Xero sells licenses that grant users remote access to their platform. SaaS is facilitated by cloud technology, and is a very popular business model amongst many new and emerging ASX software companies, like Whispir Ltd (ASX:WSP), WiseTech Global Ltd (ASX:WTC), and Dubber Corp Ltd (ASX:DUB).

Because the COVID-19 pandemic has forced so many companies to adopt remote-working arrangements, SaaS products have become more popular recently. Having these sorts of software platforms located in the cloud helps ensure employees can access them from wherever they are working, and it also means business data can be kept safe and secure.

This is particularly important for small to medium-sized businesses that may lack the resources and digital infrastructure necessary to support remote-working arrangements.

Recent financials

Because Xero is headquartered in New Zealand, it reports based on a financial year ending 31 March, which means it released its FY21 results to the market back in May.

Xero reported strong results across the board, with operating revenue up 18% year-on-year to NZ$848.8 million, supported by a 20% uplift in subscriber numbers (to 2.74 million). Net profit after tax (NPAT) increased by NZ$16.4 million year-on-year (or a whopping 493%).

Commenting on the result, Xero CEO Steve Vamos spoke about how Xero was supporting small businesses to navigate the many challenges of the pandemic. He said:

The past year has brought home to many people in small business the need to understand in real-time their financial position and how it may change. The value and importance our customers place on their subscription and connection to the broader Xero community is increasing.   

Recent movements in the Xero share price

The Xero share price declined sharply just prior to the release of the company’s FY21 results – but since then it has again rallied strongly. As at the time of writing, the Xero share price is just 6% shy of the 52-week high price of $157.99 it reached in December.

The post The Xero (ASX:XRO) share price is up 50% over the past 12 months appeared first on The Motley Fool Australia.

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Motley Fool contributor Rhys Brock owns shares of Dubber Corporation, REA Group Limited, Whispir Ltd, and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Dubber Corporation, Whispir Ltd, WiseTech Global, and Xero. The Motley Fool Australia owns shares of and has recommended Dubber Corporation, WiseTech Global, and Xero. The Motley Fool Australia has recommended REA Group Limited and Whispir 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 Mineral Resources Limited (ASX: MIN) share price has been smashed this week. Based on Thursday’s closing price of $52.30 per share, shares in the Aussie lithium miner are down 15.2% since last Friday’s close.

So, what’s causing this ASX 200 resources share to slump right now?

Why the Mineral Resources share price fell 15% this week

For one thing, Thursday was not a good day for the S&P/ASX 200 Index (ASX: XJO). The benchmark Aussie index closed the day 0.50% lower at 7,464.60 points.

However, the Mineral Resources valuation slump dwarfed that. Shares in the Aussie lithium miner closed down 6.6% on Thursday to continue a strong run of daily losses since last week’s earnings results.

Mineral Resources reported a 76% surge in revenues to $3.73 billion while underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) rose by 148% to $1.9 billion.

Mineral Resources also bumped its dividend up 175% to $2.75 per share. That means the Mineral Resources share price is now trading on a 5.3% dividend yield. The ASX 200 resources share is also trading at a price to earnings (P/E) ratio of just 7.8 times.

While those headline earnings figures are strong, investors have been selling down in recent days. That has coincided with some broader selling pressure across other lithium shares including Galaxy Resources Limited (ASX: GXY) and Pilbara Minerals Ltd (ASX: PLS).

The Mineral Resources share price is still having a pretty good 2021 by any measure. Shares in the ASX lithium miner are up almost 36% year to date which is more than triple the gains of S&P/ASX 200 Index (ASX: XJO).

Foolish takeaway

Lithium prices haven’t plummeted in recent days. However, that hasn’t stopped the Mineral Resources share price from plunging lower this week.

Shares in the Aussie lithium miner have been smashed having hit a new all-time high as recently as late July.

The post Why the Mineral Resources (ASX:MIN) share price fell 15% this week appeared first on The Motley Fool Australia.

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• 2 quality ASX dividend shares analysts rate as buys
• Why the Pilbara Minerals (ASX:PLS) share price tumbled 12% in the last week

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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