Tag: Motley Fool

Investors will be eyeing the Afterpay Ltd (ASX: APT) share price this morning after the Square Inc (NYSE: SQ) share price surged to a record high.

The Afterpay share price jumped 5.4% in early trade to $131.97 when the S&P/ASX 200 Index (Index:^AXJO) slipped 0.2%.

It’s no surprise that Afterpay is outperforming. Shares in its US bidder jumped 5.8% to $281.81 last night in New York.

Good for the goose is great for the Afterpay share price

The two share prices are largely joined at the hip given Square’s all-scrip takeover bid for the Australian-made buy-now, pay-later (BNPL) leader.

Afterpay surged over 30% when the $39 billion engagement was announced on Tuesday. This is the most extravagant marriage for an Aussie entity ever!

Square peg in a square hole

But analysts have largely given the takeover their tick of approval. There is a good strategic rational for Afterpay to be folded into Square.

Being part of a $166 billion market cap global giant will give Afterpay the resources to take on second-mover rivals.

Never mind that Afterpay’s banking partnership with Westpac Banking Corp (ASX: WBC) could be put at risk.

ASX banks growing wary

The Australian Financial Review reported yesterday that Westpac is considering pulling the plug. This is because Square is trying to muscle in payments and businesses lending – areas that the big ASX banks dominate.

Westpac provides Afterpay with white-label bank accounts that the fintech can offer its customers.

The bank is relooking at the rational for doing this as the savings accounts will give Square valuable customer insight and a source of funds.

How Square will change the Afterpay share price

Square’s core business is to provide payment terminals to small and medium sized merchants. Banks are defending their turf as such terminals are usually provided by these financial institutions.

The value of such terminals goes beyond collecting fees. The data collected is often used in accessing loan applications.

Afterpay on its own didn’t pose a threat to the banks. But the merger with Square changes the dynamics.

Will Square-Afterpay turn into the next fintech bank?

The Square-Afterpay fintech can potentially gain millions of customers and it will be in a better position to offer a range of financial services.

Square doesn’t have a banking license in Australia, but the AFR reported that this could change in the not-too-distant future.

Square has been awarded a banking license in Utah to enable it to take deposits and make loans. As it’s harder to get a US banking license than it is to in Australia, Square is keeping that option open.

The Square share price has surged 83% over the past year when the Afterpay share price added 76%.

Looking at how much excitement the proposed marriage has generated, I won’t be surprised to see their share prices push higher.

The post Afterpay (ASX:APT) share price surges as Square hits record highs appeared first on The Motley Fool Australia.

More reading

• How owning too much Afterpay (ASX:APT) was our biggest regret
• Should you buy NAB (ASX:NAB) shares in August 2021 for the dividend yield?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises, Nick Scali falls, Pinnacle jumps
• Westpac (ASX:WBC) share price struggles amid surging customer refunds

Motley Fool contributor Brendon Lau 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.

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

The BetMakers Technology Group Ltd (ASX: BET) share price is on course to end the week on a positive note.

In morning trade, the betting technology company’s shares are up 7% to $1.11.

Why is the BetMakers share price charging higher?

Investors have been bidding the BetMakers share price higher today after its US ambitions were given a major boost.

According to an announcement, fixed odds wagering on horse races through a fixed odds wagering system is now legal in the state of New Jersey after being approved by the state’s Governor.

This is a big positive for BetMakers as it has already secured an exclusive 10-year agreement to deliver and manage Fixed Odds thoroughbred horse racing into New Jersey with New Jersey Thoroughbred Horsemen Association and Darby Development.

“A landmark achievement”

BetMakers’ Chief Executive Officer, Todd Buckingham, believes this is a historic moment for the industry and a landmark achievement for the company.

He said: “The introduction of Fixed Odds betting on horse racing by law in New Jersey is a historic moment for wagering in the United States and a landmark achievement for BetMakers. New Jersey becomes the first State in the U.S. to offer Fixed Odds betting on horse racing, and opens the door for the thoroughbred industry to offer Fixed Odds betting markets on racing in the same way as sports.”

“Legalised Fixed Odds betting on horse racing in the U.S. has been a pillar of BetMakers’ strategic vision and today’s announcement enables the Company to press forward with the roll-out of Fixed Odds betting in New Jersey while also setting a precedent legal framework that is relevant for our discussions with other States in the U.S,” he added.

What now?

Mr Buckingham expects to be taking bets in the very near future, initially on course via its Managed Trading Services (MTS) agreement.

He explained: “Following the green light for Fixed Odds to become law in New Jersey, it is intended that initially the first bets will be taken on course at Monmouth Park under BetMakers’ Managed Trading Services (MTS) agreement, and we are aiming to confirm a date for this to announce in coming weeks.”

“The next step will be for approved operators who have an agreement with BetMakers to offer Fixed Odds betting to their online customers. While the company is excited by the imminent to start Fixed Odds betting, we are also mindful about doing it the most sustainable way that rewards our partners, and we will be looking to reach scale over the next 12 months,” the CEO added.

The BetMakers share price is now up 58% in 2021.

The post BetMakers (ASX:BET) share price jumps 7% after landmark achievement appeared first on The Motley Fool Australia.

More reading

• The Betmakers (ASX:BET) share price is up 53% so far in 2021. Here’s why
• Why the Betmakers (ASX:BET) share price is rocketing 8% today
• BetMakers (ASX:BET) share price up on record results
• Here are the 3 most heavily traded ASX 200 shares this Monday
• Why the BetMakers (ASX:BET) share price is racing 6% higher on Friday

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 Betmakers Technology Group Ltd. The Motley Fool Australia has recommended Betmakers Technology 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/2VksHi5

The Commonwealth Bank of Australia (ASX: CBA) share price, along with other S&P/ASX 200 Index (ASX: XJO) bank shares, could be in the spotlight on Friday. This comes as extended lockdowns result in a resurgence of requests for loan deferrals from bank customers across Australia.

This morning, the Australian Banking Association (ABA) provided an update on the current rate of loan deferrals. The figures are considerably lower than during the peak of the crisis last year but still serve to illustrate the financial toll lockdowns are taking on thousands of home and business owners.

Banks provide hardship assistance

Since 8 July more than 14,500 home loans and 600 business loans have been deferred, according to the ABA.

Interestingly, during this time, the CBA share price managed to rally 4.23% to $103.41.

In response to the sweep of lockdowns taking place across Queensland, New South Wales and Victoria, ABA Chief Executive Office Anna Bligh said “support is available to all small businesses and home loan customers significantly impacted by current lockdowns or recovering from recent lockdowns, irrespective of geography or industry.”

The ABA observed that hardship approvals and loan deferrals were heavily skewed towards NSW, given its more severe COVID-19 situation and extended lockdown.

“NSW home loan deferrals account for more than two thirds of total deferrals, while almost 80 per cent of deferred business loans are also from NSW.”

The ABA went on to report that:

“The number of customers accessing hardship grew by 73% this week, compared with a growth of 153% the week before. Growth in housing loan deferrals similarly slowed from 344% to 79%, while growth in business loan deferrals grew from 93% to 108%.”

How does this compare to peak COVID-19 figures?

Despite the uptick in loan deferrals, the current figures pale in comparison to peak COVID-19 figures in 2020.

The ABA reported that during the peak of the crisis, almost 500,000 home loans and over 225,000 business loans were deferred.

According to CBA’s FY20 results, the bank had over 250,000 loan repayment deferrals at the time.

Encouragingly, in CBA’s 1H FY21 results, the bank said that “by December 2020, the majority of customers on repayment deferral arrangements have returned to normal repayments upon expiration of deferrals”.

CBA share price in 2021

The CBA share price has rallied an impressive 23.47% year to date with most of its gains occurring between April and mid-July.

Shares in Australia’s biggest lender have largely stalled since their all-time high of $106.57 on 17 June, possibly dragged by factors including Sydney lockdowns and a fall in lending indicators.

The post CBA (ASX:CBA) share price in focus following ABA loan deferral update appeared first on The Motley Fool Australia.

More reading

• Should you buy NAB (ASX:NAB) shares in August 2021 for the dividend yield?
• Top brokers name 3 ASX shares to sell today
• How did the CBA (ASX:CBA) share price perform in July?
• FY 2021 results preview: Is the CBA (ASX:CBA) share price good value?
• Here are 3 dipping ASX shares now ready to rally

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/3yrOjXZ

The Zip Co Ltd (ASX: Z1P) share price has had a rollercoaster year thus far.

Shares in the buy-now-pay-later (BNPL) company started the year at around $5.40. By mid-February, the Zip share price had rocketed to an all-time high of $14.53.

Since then, shares in the BNPL player have been harshly sold-off by investors who are currently trading in the $7 range.

Let’s take a look at what’s been moving the Zip share price and where it goes from here.

Afterpay takeover fueling Zip share price

The Zip share price has had a strong start to the month, surging more than 14%.

The bullish price action is largely due to the recent news from BNPL market leader Afterpay Ltd (ASX: APT). Earlier this week, it was revealed that US financial payments company Square Inc (NYSE: SQ) had offered a $39 billion takeover offer for the BNPL behemoth.  

As a result, the BNPL sector as a whole has been on fire since the news. The Zip share price has been a key beneficiary from renewed interest in the sector.

Zip shares a potential takeover target

Afterpay’s purchase offer has also heightened investor expectations that Zip could be a potential takeover target.

Most recently, Swedish-backed BNPL provided Klarna increased its stake in Zip. Klarna, which is also part-owned by the Commonwealth Bank of Australia (ASX: CBA), reportedly took a 4% stake in Zip to consolidate its market share.

As the second-largest BNPL operator in Australia, shares in Zip have received extra attention following the company’s expanding international presence.

Neither Zip nor Klarna have responded to the speculation.

Outlook for the Zip share price

Recently, a note from Citi highlighted a buy rating on the Zip share price, with the broker initiating an $8.90 price target.

According to analysts, the acquisition of Afterpay could increase the takeover appeal in Zip.

In addition, the outlook for the Zip share price is also dependant on how the company performed for the financial year.

In its most recent quarterly update, Zip flagged a 116% year on year increase in quarterly total transaction volume (TTV) to $1.8 billion.

In addition, the company reported a 104% increase in quarterly revenue to $129.9 million.

Currently, there is no published date on when Zip will report its results for the full year.

The Zip share price closed yesterday’s trading session at $7.57.

The post What does the future look like for the Zip (ASX:Z1P) share price? appeared first on The Motley Fool Australia.

More reading

• Why Argosy Minerals, Genworth, Vulcan, & Zip shares are charging higher
• The Zip (ASX:Z1P) share price is zooming higher once more
• Top broker gives its verdict on the Zip (ASX:Z1P) share price
• Why Afterpay, Bellevue Gold, Pilbara Minerals, & Zip are charging higher
• Here’s why the Zip (ASX:Z1P) share price is rocketing 8%

Motley Fool contributor Nikhil Gangaram 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, Square, and ZIPCOLTD 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/3AiDgAH

The BHP Group Ltd (ASX: BHP) share price is on watch following news the company has approved the Shenzi North project and an update on the Trion project.

BHP’s Board has approved spending US$544 million to begin work at the Shenzi North project. Simultaneously, BHP has agreed to spend US$258 million on the Trion project’s front end engineering design (FEED) phase.

The BHP share price finished yesterday’s session trading for $53.14 per share.

Let’s take a closer look at today’s news from BHP.

BHP’s big spending

The BHP share price is in the spotlight this morning after the company announced it has put forward capital to start work at its Shenzi North project in the Gulf of Mexico.

The company stated the project will produce 30 million barrels of oil per day, each estimated to be worth approximately US$25.

That leaves the project with an internal returns rate of more than 35%. The company believes its investment in the project will be earned back over 2 years. Production at the project is expected to begin in the 2024 financial year.

BHP owns 72% of the Shenzi North project after it purchased an extra 28% holding for US$505 million last year.

The BHP share price gained 3.4% on the day the purchase was announced.

Repsol holds the remaining 28% of the Shenzi North project. Repsol is expected to make a final investment decision on the project before the end of the year.

BHP also released news of its Trion oil project, based in Mexico.

The company has approved spending US$258 million to begin the project’s FEED phase.

Following a successful FEED process, the company expects to make a final investment decision on the Trion project in the middle of next year.

BHP owns 60% of two blocks at Trion which contain the Trion discovery. It purchased the holding for US$62.4 million in 2016. However, it agreed to pay an additional US$624 million if it was decided the project will move beyond the minimum work program.

BHP also agreed to spend an extra US$570 million on the project’s minimum work contribution.

Commentary from management

BHP’s president operations petroleum Geraldine Slattery commented on the news that might drive the BHP share price today, saying:

Both Shenzi North and Trion are strong growth assets for our business, providing attractive returns from relatively low carbon intensity resources.

Shenzi North is aligned with the petroleum strategy to unlock and deliver further growth options in this key Gulf of Mexico heartland. This Board decision also marks an important milestone in advancing the Trion development as we continue to work with our partner PEMEX towards a final investment decision in calendar year 2022.

BHP share price snapshot

It’s been a good year for the BHP share price. It has gained 23% since the start of 2021. It is also 33% higher than it was this time last year.

 However, its fallen 1.7% over the past 7 days.

The post BHP (ASX:BHP) share price on watch as $800m of spending announced appeared first on The Motley Fool Australia.

More reading

• 3 ASX 200 mining giants making moves towards renewables
• BHP (ASX:BHP) big dividend payday might even exceed expectations
• Why the BHP (ASX:BHP) share price is up 2.5% and nearing a record high
• Why ASX lithium shares are beating the iron ore majors – again
• Own BHP (ASX:BHP) shares? Here’s what to look for during reporting season

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/3ir29V5

The Insurance Australia Group Ltd (ASX: IAG) share price has been on a rollercoaster ride for the entire year. In the past 12 months, the company’s shares are down 4%, with year-to-date moving slightly higher, up 4%.

In comparison, the S&P/ASX 200 Index (ASX: XJO) hit a record high yesterday, gaining 24% over the last 12 months. Year-to-date, the index has also surged above 14%.

During Thursday’s market close, the IAG shares finished 0.21 higher to $4.87.

IAG’s recent dividend history

Since this time last year, IAG has paid total dividends to shareholders of just 7 cents per share. You may be wondering why the figure is so low? Well, the IAG board went against rewarding shareholders in its FY20 release as a result of a challenging H2 FY20 environment.

Come February 2021, the company decided to pay an unfranked 7 cent dividend to its existing shareholders. This is a stark contrast from when IAG was regularly paying yearly dividends of 35 cents per share before COVID-19.

Based on the current share price of IAG, this translates to a dividend yield of around 1.4%. 

What to expect for IAG’s upcoming dividend?

While IAG isn’t due to report its FY21 financial results until 11th August, investors may be curious about what to expect for the upcoming dividend.

In July, IAG released a preliminary FY21 result pertaining some interesting numbers that were below Goldman Sachs forecast.

According to the update, Gross Written Premium (GWP) is expected to grow at 3.8%, while Net Earned Premium is forecasted to increase 1.5% to $7,473 million.

An underlying insurance margin is also predicted to come in at 14.7% for FY21. This metric recorded a 16% fall in the first half but is projected to bounce back by 13.5%.

In line with the earnings, analysts at Goldman Sachs believe the company will pay a full-year dividend of 22 cents per share. When factoring in the FY21 interim dividend payment of 7 cents, this equates to 15 cents for the second half.

How is the IAG share price valued?

Goldman Sachs’ latest report maintained its neutral rating on the insurance group’s shares. The investment bank indicated a 12-month price target of $5.41, which is slightly lower than the current IAG share price.

The post Should you buy IAG (ASX:IAG) shares in August 2021 for the dividend yield? appeared first on The Motley Fool Australia.

More reading

• The IAG (ASX:IAG) share price has dropped this last week. Here’s why
• How is the IAG (ASX:IAG) share price performing against the financial services sector?
• Is the IAG (ASX:IAG) share price in the buy zone?
• Own IAG (ASX:IAG) shares? Here’s what to look for during reporting season
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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/3fw7Uij

It took a 75% tumble for the A2 Milk Company Ltd (ASX: A2M) share price to find a bottom.

After hitting an all-time high of $19.94 in late July 2020, the A2 Milk share price would fall sharply for almost 10-consecutive months, before finally bouncing off a 4-year low of $5.04.

Could August be the time to give the ex-market darling a second chance?

Is the A2 Milk share price a buy in August?

Unfortunately, the A2 Milk we all know and love might be a thing of the past.

Brokers are quite bearish about the near-term performance of the A2 Milk business.

On Tuesday, the Motley Fool reported that Credit Suisse has retained an underperform rating for the A2 Milk share price.

Its analysts think that demand for A2’s products will continue to be weak and likely dampen any earnings upside in the near term.

With the A2 Milk share price closing at $6.07 on Thursday, the brokers’ target price of $5.50 represents a downside of 9.3%.

China birth policy reforms

China has introduced a number of policies in recent years in an attempt to lift rapidly declining birth rates.

On 20 July, Bloomberg reported that Beijing would regulate the country’s after-school tutoring sector in an effort to cut the cost of having children.

While the Australian Financial Review (AFR) last week highlighted that “half-a-million new, low-cost childcare places will be added across 150 cities” to further encourage families to have more children.

On paper, China’s policies to lift birth rates sounds encouraging for A2’s infant formula business.

However, rising competition in China’s domestic market and consumer preferences could pose a risk to its overseas business.

The AFR quoted commentary from CSLA analyst Richard Barwick, who said that “a2 Milk’s China label business – which represents 45 per cent of its infant formula revenue – is most exposed to the risk of pricing control as it operates in the ultra-premium sector.”

“… it is clear that China’s government is favouring domestic infant formula brands after in 2019 setting a target for local players to make up 60 per cent of consumption within three years”, the AFR added.

The next catalyst for the A2 Milk share price

A2 Milk is expected to release its full year FY21 results on 26 August.

Unfortunately, A2’s track record of full year results has been far from pleasant.

The company’s FY19 and FY20 results witnessed a respective 13.19% and 6.53% decline on the day of the results.

The post Is it a good time to buy A2 Milk (ASX:A2M) shares in August 2021? appeared first on The Motley Fool Australia.

More reading

• The A2 Milk share price is down 7% this last week. Here’s why
• Leading brokers name 3 ASX shares to sell today
• These are the 10 most shorted ASX shares
• Why a2 Milk, Afterpay, Dicker Data, & Oil Search shares are charging higher
• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high

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 recommended A2 Milk. 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/3iqZ1bN

Despite the Delta strain giving the COVID-19 pandemic a second wind, the value of one commodity is expected to skyrocket.

Research firm IBISWorld reported this week that it expects the global price for crude oil to rise a whopping 42.9% this year.

Oil prices plummeted in 2020 after the coronavirus spread around the world, suppressing long distance travel as well as daily commuting.

“Oil prices remain volatile, with demand conditions still depressed due to the ongoing pandemic,” said IBISWorld senior industry analyst James Thomson.

“However, recovering demand conditions and OPEC’s willingness to limit supply will likely support prices in the short term.”

For Australian oil producers, declining domestic demand will force them to turn to overseas markets over the coming 5 years, according to IBISWorld.

“Exports are projected to account for over 90% of Australian production volume in 2021-22, up from around 80% five years ago. The Office of the Chief Economist expects Australia’s oil exports to grow by over 40% in 2021-22, to $10.9 billion.”

Which ASX 200 shares can benefit from the oil price boost?

Some of the S&P/ASX 200 Index (ASX: XJO) companies that could take advantage of the 43% boost in crude oil prices are:

• Santos Ltd (ASX: STO)
• Oil Search Ltd (ASX: OSH)
• Woodside Petroleum Limited (ASX: WPL)
• Ampol Ltd (ASX: ALD)
• Beach Energy Ltd (ASX: BPT)

Oil Search and Santos are in a complicated dance at the moment with the latter trying to acquire the former. Both ASX shares are falling while the Papua New Guinea government might even have a say in the proposal.

Santos fell 1.24% on Thursday and Oil Search dipped 1.51%. Both stocks have gone sideways this year.

Woodside shares have fallen more than 5.9% this year. But The Motley Fool has previously reported that its dividends might be the best in the energy sector.

Ampol is slightly different to the other companies as it also runs a retail network for its petroleum as well. A couple of weeks ago, Macquarie Group Ltd (ASX: MQG) rated it as a ‘buy’ for the potential of a capital return during the August reporting season.

Beach Energy has had an unhappy year, with its shares losing almost 35% in value. The Motley Fool reported that it is actually the worst-performing ASX energy stock so far in 2021. Disappointing third quarter results revealed in late April seems to have been the catalyst. Beach Energy shares lost an eye-watering 22% that fateful day.

The post 43% surge: ASX 200 shares that could rake it in this year appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Oil Search (ASX:OSH) share price sliding amid fresh merger concerns
• Here are the best and worst performing ASX 200 energy shares of 2021
• Why ASX Energy shares are the worst performers today
• ASX 200 midday update: Energy shares drop, Resolute jumps, Xero higher

Motley Fool contributor Tony Yoo owns shares of Macquarie Group 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 Macquarie 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/3jqVwkI

The REA Group Limited (ASX: REA) share price could be on the move today.

This follows the release of its full year results for FY 2021 this morning.

REA share price on watch after strong FY 2021 result

• Revenue increased 13% to $928 million.
• Earnings before interest, tax, depreciation and amortisation (EBITDA) up 19% to $565 million. This compares to the market consensus estimate of $560 million.
• Net profit increased 18% to $318 million.
• Full year dividend of 131 cents per share, up 19% year on year

What happened in FY21 for REA?

For the 12 months ended 30 June, REA was on form and delivered a 13% increase in revenue and an 19% jump in EBITDA. This was ahead of the consensus estimate, which could bode well for the REA share price today.

REA advised that this reflects excellent cost control and a strong Residential market recovery despite significant first quarter listing declines in Melbourne due to COVID lockdown measures.

This result also includes the acquired Elara business. Excluding the impact of acquisitions, revenue would have been up 11% and net profit would have been even higher and up 24% year on year.

In respect to costs, the company advised that its cost management restricted cost growth to 3% year on year. This increase was driven primarily by increased headcount and volume-related costs and incentives linked to stronger revenue growth, partly offset by lower costs in Asia.

Once again, REA continues to dominate the property listings market in Australia. It advised that 12.6 million people visited realestate.com.au each month on average during FY 2021. This led to 121.9 million average monthly visits. This was up 35% year on year and was 3.3 times more than its nearest competitor.

It is also having a lot of success with its app. Average monthly app launches were 55 million in FY 2021, up 49% year on year.

What did management say?

REA Group’s CEO, Owen Wilson, commented: “This has been a defining year for REA, successfully navigating the pandemic to deliver an excellent financial result and emerge an even stronger business.”

“I am very proud of our team’s ability to respond to the changing needs of our customers and consumers during the pandemic, while also accelerating our growth strategy through a number of pivotal investments. Our flagship site realestate.com.au delivered stellar results, extending its position as the clear market leader in digital real estate and it is now Australia’s eight largest online brand overall.”

What’s next for REA?

Also potentially giving the REA share price a boost today was its outlook commentary. Although management acknowledges that COVID-19 and lockdowns could impact its performance, it notes that it has bounced back strongly from previous disruptions over the last 18 months. Furthermore, this year its Australian Residential business will benefit from price increases which came into effect from the start of July.

One slightly disappointing (but not unexpected) note was in relation to current trading. July listing volumes fell 3% year on year due to weakness in the Sydney market because of its lockdown.

Looking ahead, once again, REA is targeting positive jaws in FY 2022. This is where revenue growth is stronger than its costs growth, leading to margin expansion. This could mean another year of solid profit growth for REA if all goes to plan.

Mr Wilson concluded: “REA is entering the new financial year with strong momentum, despite ongoing lockdowns. This momentum, coupled with our strategic investments and exciting product roadmap, provides an excellent platform for our continued growth.”

The REA share price is up 50% over the last 12 months.

The post REA (ASX:REA) share price in focus after strong FY 2021 growth appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Top brokers name 3 ASX shares to buy today
• Own REA (ASX:REA) shares? What to look out for this reporting season
• 2 buy-rated ASX 200 blue chip shares for investors in August
• 2 blue chip ASX 200 shares rated as buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA 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/2VlaKjq

AMP Ltd (ASX: AMP) shares have been a huge disappointment for investors over the last decade.

During this time, the financial services company with a focus on creating wealth for its clients, has destroyed the wealth of its shareholders.

What has happened to AMP?

While AMP shares were struggling long before the Royal Commission, it was this event that appears to have had the biggest impact on their performance.

The company’s reputation took a major hit due to its questionable financial planning practices. This includes AMP charging thousands of dead superannuation customers for life insurance, despite allegedly being aware that there was no longer a life to insure.

Unsurprisingly, since then the reputational damage has led to the company experiencing billions of dollars of fund outflows, putting further pressure on AMP’s shares and its profits.

What if you had invested $1,000 into AMP shares 10 years ago?

Over the last 10 years the AMP share price has crashed a massive 73.2%.

This means that if you had invested $1,000 into AMP shares in August 2011, your shares would be worth just ~$270 today.

Though, it is worth noting that AMP was a generous dividend payer up until recently. This has arguably been the saving grace for shareholders.

If you had reinvested its dividends over the period, those AMP shares would be worth approximately $800 today. This represents an average annual negative return of 2.23% per annum over the period.

While this is of course much better than the share price return, investors need to consider opportunity cost. This is essentially the difference between the return on one asset versus another that investors could have chosen.

For example, during the same period, the Australian share market provided a total return of 10.4% per annum. This would have turned a $1,000 investment into just under $2,700. That’s $1,900 more than investors earned with AMP shares.

Shareholders will no doubt be hoping AMP’s restructure and new management team leads to a significantly better performance in the decade ahead.

The post If you invested $1000 in AMP (ASX:AMP) shares a decade ago, this is how much it would be worth now appeared first on The Motley Fool Australia.

More reading

• The AMP (ASX:AMP) share price is down 6% over the past month. Here’s why
• AMP (ASX:AMP) share price on watch as new CEO commences “rebuild”
• Here are 3 heavily traded ASX 200 shares on the markets today
• AMP (ASX:AMP) share price on watch as ASIC starts legal action
• Own AMP shares? Here’s what to look for during reporting season

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/3fBvbPU