Tag: Motley Fool

The AGL Energy Limited (ASX: AGL) share price has truly failed to deliver shareholder value, sliding more than 70% since its $27 peak in 2017.

But for investors looking at earnings season for signs of reassurance, AGL has more often than not left its investors with an even bigger hole in their pockets.

AGL share price crashes on FY20 results

The AGL share price fell 9.38% to $15.36 following the release of its full-year FY20 results.

The electricity business reported an underlying profit after tax of $816 million, or a 22% decline on the prior corresponding period.

Despite the alarming decline, this result was within the company’s guidance range.

However, its forward-looking guidance for FY21 was far more alarming.

AGL flagged its expected profit after tax to be in the range of $560 million to $660 million in FY21.

What happened next?

By 21 December 2020, AGL would issue another guidance downgrade, citing underlying profit after tax for FY21 to be between $500 million and $580 million.

The profit downgrade would see the AGL share price slide another 5.14% to $12.54.

By the time AGL’s half-year results were due, investors were well aware of what to expect.

Underlying net profit after tax (NPAT) would sink to $317 million, or a 27% decline on the prior corresponding period. This was driven by lower revenues due to weak wholesale prices for electricity and the additional impact of higher depreciation expenses.

The AGL share price managed to tip 1.25% higher to $11.30 on the day the half-year results.

But just two weeks later, AGL shares would tank another 14% to $9.68.

Where do brokers stand?

The Motley Fool’s latest broker coverage of AGL quoted a neutral rating and $8.40 target price from Goldman Sachs.

The broker flagged that “…while macro tailwinds post-COVID support the fundamental recovery for the business, near-term shareholder returns have been reduced with the removal of the special dividend and introduction of an underwritten DRP.”

Meanwhile, Credit Suisse gave AGL a sell rating and a $6.70 target price.

The post How did the AGL (ASX:AGL) share price perform last earnings season? appeared first on The Motley Fool Australia.

More reading

• What can we learn from the AGL Energy (ASX:AGL) share price history?
• Could it be time to consider buying AGL (ASX:AGL) shares?
• Own AGL (ASX:AGL) shares? Here’s what to look for during reporting season
• It hasn’t been a great week for the AGL (ASX:AGL) share price
• The AGL (ASX:AGL) share price just hit its lowest point in 17 years

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.

from The Motley Fool Australia https://ift.tt/3yFH4f3

The Insurance Australia Group Ltd (ASX: IAG) share price will be one to watch closely on Wednesday.

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

IAG share price on watch after almost tripling its cash earnings

• Gross written premium (GWP) increased 3.8% to $12,135 million
• Insurance profit up 35.9% to $1,007 million
• Underlying insurance margin down 130 basis points to 14.7%
• Reported insurance margin up 340 basis points to 13.5%
• Net loss after tax of $427 million
• Cash earnings up 170% to $747 million
• Full year dividend doubled to 20 cents per share

What happened for IAG in FY 2021?

The good news for the IAG share price on Wednesday is that the insurer returned to form in FY 2021.

IAG revealed GWP growth of 3.8% for the year, which was mainly rate driven, but also supported by promising new business growth and stronger customer retention.

Another positive during the year was its reported insurance profit of $1,007 million, which is an increase of 35.9% over FY 2020. This was due mainly to lower natural perils costs, positive credit spreads, and a first half COVID-19 benefit largely from lower motor claims in Australia. This translated to an improved reported insurance margin.

As per its announcement in July, IAG reported a net loss of $427 million for the year. This was due to significant one-off corporate expenses mainly relating to business interruption, customer refunds, and payroll remediation. Management notes that these are historical issues that have been identified, provisioned for, and are being fixed. The company is also making investments to continue to lift its risk management and operational capabilities.

Finally, its cash earnings, which exclude one-off items, increased 170% to $747 million. This allowed the company to announce a final dividend of 13 cents per share, which takes its payout ratio to 66% based on full year cash earnings.

What did management say?

IAG’s Managing Director and CEO, Nick Hawkins, was pleased with the company’s performance in FY 2021.

He said: “We are pleased with the underlying financial results we are delivering today. Our FY21 business performance is sound and reflects the strength of our core insurance business and its marketleading brands. The underlying margin of 14.7% (FY20: 16.0%) is within expectations and we’ve reinstated guidance for FY22, reflecting the confidence we have in our business and economic outlook.”

“I’m confident that the strong leadership team I’ve established, the new organisational structure we have in place and the strategy we’re executing will deliver business and customer growth. IAG is a company guided by a clear purpose ‘to make your world a safer place’ that makes a real difference to our customers and communities. I’m focused on IAG’s long-term future, and together with my leadership team and our people, we will build a stronger, more resilient company,” he added.

What’s next for IAG?

Positively for shareholders and the IAG share price, the company is forecasting low single-digit GWP growth and a reported insurance margin of between 13.5% to 15.5% in FY 2022.

Management notes that its FY 2022 guidance aligns to its aspirational goal to achieve a 15% to 17% insurance margin over the medium term.

This goal encompasses organic direct customer growth that at least matches the market in Direct Insurance Australia and New Zealand, an insurance profit of at least $250 million over the next three to five years for Intermediated Insurance Australia, and delivering further simplification and efficiencies in the cost structure of the company.

“We are optimistic about the outlook for IAG and are reintroducing guidance for FY22. The strength of our core business and its sound underlying performance in FY21, our new operating model with clear, embedded executive responsibilities, as well as greater certainty in the economic outlook, mean that we are confident that IAG’s underlying performance will continue to improve,” Mr Hawkins concluded.

IAG share price performance

The IAG share price is currently up 12% year to date. This means it is outperforming the ASX 200 by a slender margin.

The post IAG (ASX:IAG) share price on watch after 170% jump in cash earnings appeared first on The Motley Fool Australia.

More reading

• The ASX reporting wrap-up: Challenger, Megaport, James Hardie
• How did the IAG (ASX:IAG) share price respond last earnings season?
• Here are the 10 top moving ASX shares on Monday
• Why Family Zone, IAG, Latitude, & Suncorp shares are charging higher
• IAG (ASX:IAG) share price lifts following major board reshuffle

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 Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3xETEKh

There are some exciting ASX tech shares that investors may want to keep their eyes on.

Businesses in the technology space are often innovators and provide a new service that may be attracting a lot of customers or clients.

Digital services can typically come with lower operating costs, leading to higher profit margins for the businesses involved.

Here are two in the ASX tech share space that could be worth thinking about:

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is aiming to be Australia’s largest business, offline or online, for furniture and homewares in its home market.

The company is seeing growing customer loyalty, with FY21 revenue per active customer increasing 12% year on year due to repeat buying more often and spending more when they do.

The ASX tech share says that demographic and structural changes will drive strong market growth for years to come.

A key point is that millennials, who are more likely to shop online, are entering the company’s core spending demographic between 35 to 65.

Temple & Webster also believes there are a number of structural changes that will benefit its future. There are physical store closures, new consumer habits are being formed during lockdowns, faster internet and mobile speeds, net market entrants (like Amazon) accelerating online shopping take-up and new technology improving the experience and conversion (such as augmented reality).

The business has an asset light business model and it plans to invest heavily over the coming years in technology, the customer experience, better service, expanded private label range and eventually expand overseas.

It continues to grow rapidly. In FY21 it saw full year revenue growth of 8% to $326.3 million. In the first few weeks of July 2021, it saw revenue rise another 39%.

Adore Beauty Group Ltd (ASX: ABY)

Adore Beauty is another business in the e-commerce space. The company sells around 11,000 products from a portfolio of over 260 brands.

It hasn’t released its FY21 result yet (due 30 August 2021), but Adore Beauty is expecting to report revenue growth for the year of between 43% to 47%. That was after it reported that its third quarter revenue went up 47% to $39.4 million.

The ASX tech share points to both its opportunity and the benefit of scale. Adore Beauty recently said:

The beauty and personal care (BPC) market in Australia is worth $11.2 billion and is expected to grow at a 26% compound annual growth rate (CAGR) to 2024. Online sales comprise 11.4% of the BPC market, a lower rate of penetration than in developed markets like the US, UK and China. Given this significant opportunity, Adore Beauty’s strategy remains focused on growing its market share through disciplined investment to drive brand awareness, new customer acquisition and returning customer retention. Given the predominately fixed nature of the business’ cost base, management expects scale benefits to increase operating leverage and deliver earnings before interest, tax, depreciation and amortisation (EBITDA) margin expansion in the longer term as the company continues to grow revenue.

The ASX tech share continues to see a structural shift in consumer behaviour towards online retail, based on continued strong retention of customers acquired during the COVID-19 lockdowns.

It’s currently rated as a buy by the broker UBS with a price target of $5.60.

The post 2 exciting ASX tech shares that could be buys appeared first on The Motley Fool Australia.

More reading

• 3 excellent ASX tech shares
• 2 exciting ASX growth shares analysts love
• 2 leading ASX e-commerce shares that could be buys in August 2021
• 2 ASX tech shares rated as buys
• Top brokers name 3 ASX shares to buy next week

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 Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3AwdXLP

The Corporate Travel Management Ltd (ASX: CTD) share price has continued to push higher in recent weeks despite the many lockdowns across Australia.

Since this time last month, the corporate travel specialist’s shares are up 5% to $21.63.

This means the Corporate Travel Management share price is now up 26% since the start of the year and trading within sight of its two-year high.

As a comparison, the Flight Centre Travel Group Ltd (ASX: FLT) share price and Webjet Limited (ASX: WEB) share price are down 7% and 1%, respectively, year to date.

Why is the Corporate Travel Management share price outperforming its peers?

The Corporate Travel Management share price has been outperforming its fellow travel bookers this year due to its focus on corporate travel.

This side of the market has been performing significantly better than the leisure market during the pandemic. In Australia, this is due largely to strong demand from the government and mining sectors. Whereas internationally, the reopening of economies has underpinned a rebound in business travel.

So much so, Corporate Travel Management broke even during March and was expecting to be profitable during the fourth quarter of FY 2021.

And while recent lockdowns may make this a bit more challenging, brokers remain positive on the company.

What are brokers saying?

A note out of UBS from the end of last month reveals that its analysts have retained their buy rating and lifted their price target on the company’s shares to $24.00.

Based on the current Corporate Travel Management share price, this implies potential upside of 11% over the next 12 months.

It believes the successful rollout of vaccines in Europe and the US will support a rebound in their respective travel markets. In fact, UBS notes that agent bookings for domestic travel in the US are now higher than in 2019, with US business travel already at 50% to 55% of pre-pandemic levels.

It is also seeing similarly positive trends in Europe, with short-haul capacity at European airlines now at 80% of pre-pandemic levels.

In light of this, it appears to believe Corporate Travel Management shares are good value and could keep rising from here.

The post Why the Corporate Travel Management (ASX:CTD) share price is outperforming appeared first on The Motley Fool Australia.

More reading

• Are you a ‘Catch and Release’ investor?
• Fund manager sees Webjet (ASX:WEB) share price as ‘golden’ opportunity
• How to turn $20,000 into $250,000 in 10 years with ASX shares
• Fresh blow to ASX 200 travel shares as Victoria lockdown looms large

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 Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2VIEEOA

The Mineral Resources Limited (ASX: MIN) share price jumped 2.15% higher on Tuesday to close at $60.30 per share. That’s despite large parts of Australia still being subject to strict lockdown conditions.

Let’s take a look at how the Aussie lithium and iron ore miner’s value has changed during past lockdowns.

How does the Mineral Resources share price perform during lockdowns?

While there have been multiple lockdowns across the country in the past 18 months, there are a few that particularly stand out. The countrywide shutdown in March 2020, Victoria’s stage 4 restrictions from August to October 2020, and the current Sydney/Melbourne lockdowns.

Let’s take a look back to February and March 2020. The S&P/ASX 200 Index (ASX: XJO) was in freefall. Borders slammed shut and investors were in panic mode as COVID-19 took hold. But the Mineral Resources share price weathered the bear market and climbed higher.

Shares in the Aussie miner closed at $40.48 per share on 8 January. While the rest of the market took a turn around 20 February, Mineral Resources shares had already dipped lower and were climbing back towards that $40 per share mark.

What about more recent lockdowns?

After this initial lockdown, the Victorian stage 4 restrictions came into place in August 2020 and lasted until the end of October. The Mineral Resources share price did fall lower in August but managed to lift 5.8% by the end of October.

This period of restrictions also coincided with climbing lithium and iron ore prices which were good for earnings.

That brings us to the current state of play. The Mineral Resources share price has rocketed 56.75% in 2021 so far. Since 16 June, when the first Bondi cluster case was detected, the miner’s value has jumped 23.69% higher.

Once again, commodity prices appear to be the name of the game. Many in the market are forecasting a continued strong pricing environment for iron ore and lithium thanks to strong demand and supply deficits.

The post How does the Mineral Resources (ASX: MIN) share price perform during lockdowns? appeared first on The Motley Fool Australia.

More reading

• The ASX reporting wrap-up: Challenger, Megaport, James Hardie
• Why ASX lithium shares are surging to new highs today
• How is the Mineral Resources (ASX:MIN) share price holding up against the materials sector?
• Top brokers name 3 ASX shares to sell next week
• These were the worst performing ASX 200 shares 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.

from The Motley Fool Australia https://ift.tt/3iBNrus

There are a group of high-quality ASX dividend shares that may be options for investors to consider for consistent investment income.

In an uncertain world, it could be a good idea to think about businesses that are seemingly capable of still paying a dividend.

Here are two ASX dividend shares that may be candidates:

Rural Funds Group (ASX: RFF)

Rural Funds is a leading real estate investment trust (REIT) which specialises in owning a portfolio of quality farms around Australia.

It owns several different farm types including almonds, cattle, vineyards, macadamias and cropping (sugar and cotton).

The farm landlord has a number of major tenants signed up on long-term contracts, giving clear rental income visibility. Some of those tenants include JBS, Olam, Select Harvests Limited (ASX: SHV) and Treasury Wine Estates Ltd (ASX: TWE).

One of the main aims of Rural Funds is grow the distribution for investors by 4% per annum. It has achieved this goal since it listed several years ago and started paying a distribution.

It achieves this distribution through two organic methods. One way is that it regularly invests in its farms either to make them more productive for tenants, or change the farm type to a better/more profitable use.

The other ‘organic’ way Rural Funds achieves distribution growth is thanks to the rental increases that are built into the rental contracts. That rental indexation is either a fixed 2.5% annual increase, or linked to CPI inflation, with some contracts containing market reviews.

Based on the FY22 distribution guidance of 11.73 cents per unit, that equates to a forward distribution yield of around 4.5% for the ASX dividend share.

Brickworks Limited (ASX: BKW)

Brickworks is a business that has had one of the most consistent dividends over the last few decades.

It hasn’t cut its dividend in over 40 years. Brickworks says that it’s proud of its long history of dividend growth and the stability it provides to shareholders. Indeed, it has maintained or increased its dividend every year for 45 years.

Brickworks points to its 39.4% stake in the investment company Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) as an important contributor. Soul Patts, according to Brickworks, has a track record of delivering outperformance during difficult market periods. This was seen during the year to 31 January 2021, where Soul Patts’ return was 29.5% and the ASX All Ordinaries Accumulation Index return was a return of negative 0.7%.

With its portfolio of assets like telecommunications, IT, financial services, mining, energy and pharmaceuticals, Soul Patts is expected to continue to deliver a stable and growing stream of earnings and dividends over the long-term.

Whilst the current COVID-19 outbreak is hurting the ASX dividend share’s Australian building products production, it is hopeful about the long-term potential of its joint venture industrial property trust.

Regarding that trust, Brickworks says there is a trend towards online shopping, and demand for more sophisticated facilities to drive growth. The completion of pre-committed facilities over the next two years will result in a significant uplift in rental income and asset value, according to Brickworks.

At the current Brickworks share price, it has a grossed-up dividend yield of 3.5%.

The post 2 ASX dividend shares that could provide steady income in retirement appeared first on The Motley Fool Australia.

More reading

• Why the Brickworks (ASX:BKW) share price could still be a buy
• 2 ASX dividend shares with 4%+ yields
• Brickworks (ASX: BKW) share price down 5% as operations curtailed
• 2 ASX dividend shares with high yields
• 3 ASX shares insiders are buying ahead of reporting season

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, Treasury Wine Estates Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3xzcmmt

The Telstra Corporation Ltd (ASX: TLS) share price reached a 52-week high yesterday on the back of its upcoming results. It appears investors are upbeat about the company’s performance in FY21, sending its shares on an upwards trend.

After the market close on Tuesday, the telco’s share price rallied 0.79% higher to $3.85. This means that its shares are now 30% higher than its November 2020 lows of $2.66.

Below, we take a closer look to see what we can learn from the Telstra share price performance last earnings season.

What happened in the first half of FY21?

In mid-February 2021, Telstra delivered its half-year results to the ASX, reporting a fall across key metrics.

Here’s a quick summary of the highlights mentioned in the H1 FY21 release:

• Total income decreased by 10.4% to $12 billion due to a drop off in consumer and small business revenue.
• Earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 14.2% to $3.2 billion due to NBN headwinds and COVID-19 impact
• Net profit after tax (NPAT) shed 2.2% to $1.1 billion.

Despite the disappointing performance, investors pushed up Telstra shares from $3.17 on 10 February to $3.33 in the days following. However, its share price rise was short-lived, soon plummeting to as low as $3.04 on 11 March. This represents a decline of around 10% in the space of 4 weeks.

What should investors look out for this earnings season?

With Telstra scheduled to report its full-year results on Thursday, investors may be wondering what’s on the cards.

According to Goldman Sachs, the market is expecting another loss for its second-half FY21 results.

Total income is forecasted to fall around 11% to $23.2 billion. Although, this is within the upper end of its previous guidance range of $22.6 billion to $23.2 billion.

EBITDA is also projected to fall 16% to $7.6 billion, consisting of underlying EBITDA down 8% to $6.81 billion. Again, this is within prior estimates of $6.6 billion and $6.9 billion.

NPAT is predicted to fall 27% to $1.7 billion.

Regardless of the lower results, Telstra is assumed to pay a fully-franked final dividend of 8 cents per share.

Telstra share price snapshot

In 2021, the Telstra share price has gained close to 30%, reaching pre-pandemic levels. If the company’s share price can surge above the $4 mark, it will be at a multi-year high from 2017.

Telstra commands a market capitalisation of around $45.8 billion, making it the 12th largest company on the ASX.

The post How did the Telstra (ASX:TLS) share price respond last earnings season? appeared first on The Motley Fool Australia.

More reading

• Telstra (ASX:TLS) and this ASX dividend share are rated as buys
• These 3 ASX 200 shares were the most traded this Tuesday
• The Telstra (ASX:TLS) share price just hit another new 52-week high
• 3 high conviction ASX 200 shares that could be buys this August
• 2 ASX dividend shares with 4%+ yields

Motley Fool contributor Aaron Teboneras owns shares of Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3fPHZSK

The Woolworths Group Ltd (ASX: WOW) share price has climbed 18.0% in the last 12 months. That’s a solid growth number, but shares in the Aussie conglomerate actually lag the S&P/ASX 200 Index (ASX: XJO) over this period.

The benchmark Aussie index is up 23.2% in the last year after closing at 7,562.60 points

Why is the Woolworths share price underperforming the ASX 200?

It’s worth taking a look at which industries Woolworths actually operates in. According to the group’s half-year results, Woolworths has segments comprising Australian Food, New Zealand Food, Big W, Endeavour Drinks (since spun-off) and Hotels.

That means there are multiple industry factors that could explain recent Woolworths share price performance.

The coronavirus pandemic has been a major factor disrupting markets in recent months. On-again, off-again lockdowns have hit business earnings and caused share price slumps in various sectors.

Lockdowns are clearly not good for venue-based hospitality. Fewer people are able to leave their homes to spend in these venues. However, alcoholic drinks retailers and supermarkets can often benefit from a spike in sales as lockdowns kick in.

That leaves the Woolworths share price subject to opposing forces impacting valuations. Meanwhile, ASX 200 shares have been pulled higher with particularly strong gains in the technology and mining sectors.

Those are notably two sectors that Woolworths doesn’t have operations in. That means the Woolworths share price has lagged behind the broader ASX 200 index which has been propelled by the likes of Afterpay Ltd (ASX: APT) and BHP Group Ltd (ASX: BHP).

Then there’s the recent Endeavour Group Ltd (ASX: EDV) spin-off. Endeavour completed its initial public offering (IPO) on 24 June 2021 and has gained steadily in the weeks since.

Foolish takeaway

The Woolworths share price has seen some strong gains in the past 12 months. However, the ASX 200 share still lags the benchmark index with tech and mining gains propelling the broader market higher.

The post Why the Woolworths (ASX: WOW) share price has underperformed the ASX 200 in the last year appeared first on The Motley Fool Australia.

More reading

• Woolworths (ASX:WOW) share price struggles after online order outage
• ASX 200 Weekly Wrap: Blockbuster Afterpay deal turbocharges ASX to new record highs
• Woolworths (ASX:WOW) share price rises as it launches new homewares range
• Woolworths (ASX:WOW) share price unhurt by call for COVID bouncers
• Woolworths (ASX:WOW) share price up as stores converted to online hubs

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. owns shares of and has recommended AFTERPAY T FPO. 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.

from The Motley Fool Australia https://ift.tt/2VLJoTF

The QBE Insurance Group Ltd (ASX: QBE) share price will be one to watch tomorrow.

The company is due to release its results for the first half of the 2021 calendar year tomorrow morning.

The release of results is always exciting, no matter the company, but eyes will be on QBE in particular tomorrow.

That’s because QBE’s shares have previously reacted positively to the release of its results, even if said results were undesirable.

The insurance company’s shares finished Tuesday’s session trading for $11.62 a piece. But all that could soon change.

Let’s take a look at how the QBE share price moved last time the company released results.

How QBE stock responded last earnings season

The QBE share price might be in for a wild ride tomorrow when the company releases its results for the first half of 2021.

QBE released its latest half year results in August last year. They included a sizeable loss of US$712 million.

However, the company stated it has done better than it expected.

QBE’s half year results included an increase in catastrophe insurance claims.

The claims followed large amounts of damage caused by hail, storms, and bushfires in Australia.

In addition to the natural disasters, COVID-19 made a huge economic impact on Australia, and QBE was among many companies suffering as a result.

The QBE share price gained 6.7% on the back of its 2020 half year results despite the blow to the company’s budget.

The last time the company released results was in February when it issued its full year results for 2020.

QBE reported it lost more than US$1.5 billion over 2020. It also didn’t pay a dividend to its shareholders.

Despite the notable loss, its share price surged 8.8% over the 2 days following the results’ release.

QBE share price snapshot

The QBE share price has been performing well lately.

It’s gained 35% year to date. It has also increased 15% over the past 12 months.

The post How did the QBE (ASX:QBE) share price respond last earnings season? appeared first on The Motley Fool Australia.

More reading

• Here are the 10 top moving ASX shares on Monday
• Here’s why the QBE (ASX:QBE) share price is up 27% so far in 2021

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.

from The Motley Fool Australia https://ift.tt/3lNT3nn

All eyes will be on the Commonwealth Bank of Australia (ASX: CBA) share price on Wednesday.

This follows the release of the banking giant’s highly anticipated full year results this morning.

CBA share price on watch after announcing $6 billion share buyback

• Net profit after tax up 19.7% year on year to $8,843 million
• Cash earnings up 19.8% to $8,653 million (versus analyst consensus estimate of $8,464 million)
• Loan impairment expense and provisions down 78% to $554 million
• Net interest margin down 4 basis points to 2.03%
• CET1 ratio up 150 basis points to 13.1%
• Fully franked final dividend of $2.00 per share declared. Full year dividend up 17% to $3.50 per share
• $6 billion off-market share buy-back, which is expected to reduce its share count by ~3.5%.

What happened in FY 2021 for CBA?

The CBA share price could be on the rise today after Australia’s largest bank delivered a result ahead of the market’s expectations.

For the 12 months ended 30 June, the bank reported cash earnings of $8,653 million. This was 19.8% higher year on year and driven by an improvement in economic conditions and its outlook. This led to lower loan impairment expense and a strong contribution from volume growth in all core markets. The analyst consensus estimate was for cash earnings of $8,464 million in FY 2021.

This strong form was driven by growth across business lending, home lending, and household deposits. Business lending grew over 3x system, home lending was 1.2x system, and household deposits grew 1.2x system.

Holding back its profit growth slightly was a 3.3% increase in operating expenses to $11,359 million. This was driven by its investment in the franchise, higher volumes, and remediation costs. Excluding the latter, operating expenses would have been up 2.4% year on year.

Management also advised that its net interest margin was 2.03%, down by 4 basis points. This was due to higher liquid assets, with the impact of the low-rate environment largely offset by management actions, lower wholesale funding costs, and favourable funding mix.

One positive that could boost the CBA share price today was its loan impairment expense, which fell 78%. The bank has, however, maintained a strong provision coverage ratio of 1.63%. This reflects the economic uncertainty from the continuing impacts of COVID-19.

What did management say?

Commonwealth Bank’s Chief Executive Officer, Matt Comyn, was pleased with the bank’s greatly improved performance during FY 2021.

He said: “The continuing strength of our businesses, combined with a focus on customer needs, digital engagement and consistent operational excellence has contributed to a strong financial result this year.”

“A highlight of the result is our continued balance sheet strength and very strong capital position that has allowed us to support our customers while delivering strong and sustainable returns to shareholders. As a result, a final dividend of $2.00 per share, fully franked, has been determined, with shareholders receiving a full year franked dividend of $3.50.”

“Strategic divestments have generated $6.2 billion1 in excess capital since 2018. Today we have announced an off-market buy-back of up to $6 billion of CBA shares as the most efficient and appropriate way to commence the return of surplus capital, as shareholders will benefit from a lower share count that will support return on equity and dividends per share,” he added.

What’s next for CBA?

Mr Comyn acknowledges that the pandemic continues to have an impact on the Australian economy. Nevertheless, he believes the bank is prepared for a range of scenarios.

He explained: “As the past 18 months have shown, Australia has a very strong, stable and secure financial system. This includes well-capitalised and strong banks like the Commonwealth Bank, which together with the support of the federal and state governments, regulators and the broader industry, have helped the country through the worst pandemic in living memory.”

“We are prepared for a range of different economic scenarios and are well placed to support our customers. We’re committed to new and ongoing support measures for those most impacted by COVID-19 and other events. We will continue to work closely with our retail and business customers to understand their needs.”

The Chief Executive revealed that this uncertainty won’t stop the bank from investing to strengthen its offering and leadership position.

Mr Comyn concluded: “Looking ahead, we anticipate ongoing economic impacts and earnings pressure from lower interest rates. We will continue to invest in the business to reinforce our product offering to our retail and business customers and extend our digital leadership. Through disciplined execution and our people’s care and commitment, we will continue to deliver for our customers, community and our shareholders as we build tomorrow’s bank today.”

CBA share price outperforms in 2021

Prior to today, the CBA share price was up 27% since the start of the year. This is more than double the ASX 200’s return over the period. Shareholders will no doubt be hoping today’s result and buyback announcement will be enough to extend the CBA share price outperformance on Wednesday.

The post CBA (ASX:CBA) share price on watch after FY21 results & $6bn buyback appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• The ASX reporting wrap-up: Challenger, Megaport, James Hardie
• Is now a good time to buy Bendigo and Adelaide Bank (ASX:BEN) shares?
• How did the CBA (ASX:CBA) share price respond last earnings season?
• Why the CBA (ASX:CBA) share price will be on watch today

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

from The Motley Fool Australia https://ift.tt/3lNvZ8d