Tag: Motley Fool

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Amazon (NASDAQ: AMZN) is about to make the biggest change to its lineup in more than a quarter-century. Founder Jeff Bezos will formally relinquish his role as CEO, handing the reins to Andy Jassy, the head of Amazon Web Services (AWS), the company’s cloud computing unit.

At Amazon’s annual shareholder meeting, which was held virtually on Wednesday, Bezos announced that the formal changing of the guard will take place on July 5, marking the 27-year anniversary of the date Amazon was incorporated back in 1994. 

Bezos also had high praise for Jassy, noting that he would be leaving Amazon in good hands. “He has the highest of high standards, and I guarantee Andy will never let the universe make us typical,” Bezos said during the digital meeting. “He has the energy needed to keep alive in us what has made us special.”

He also acknowledged that the company is still committed to making big bets that could ultimately fail, like the Amazon Care telehealth service and the Project Kuiper satellite internet network. “The only way to get above-average returns is to take risks, and many won’t pay off,” Bezos said.

He is well known for his views on failing. In Amazon’s 2018 letter to shareholders, he argued that good leaders should make it OK for their company to fail. “If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle,” Bezos wrote. He went on to say that for a company of Amazon’s size, it would “occasionally have multi-billion dollar failures,” noting that not even all good bets pay off.

In conjunction with Amazon’s fourth-quarter earnings report in February, the company announced that Bezos could transition to the role of executive chair sometime during the 2021 third quarter, with Jassy assuming the role of CEO. At the time, Amazon didn’t provide a specific date for the changeover.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The post Amazon CEO Jeff Bezos to formally step down, turn reins over to Andy Jassy appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Aussie Broadband Ltd (ASX: ABB) share price is rising today following news the company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) could be 38% to 62% higher than previously predicted.

At the time of writing, shares in Aussie Broadband are trading 0.75% higher than yesterday’s close at $2.67. During morning trade, the Aussie Broadband share priced jumped by more than 11% before retreating to its current level.

The telecommunications company also announced it has lowered its guidance on the number of residential connections it expects to see added to its network in 2021.

Finally, Aussie Broadband has named the first customer for its new white label solution and updated the market on its optic fibre rollout.

Let’s take a closer look at the company’s news.

Aussie Broadband’s update

Increased EBITDA

Aussie Broadband stated this morning it now expects EBITDA of between $17 million and $20 million, excluding approximately $1 million of expenses from the company’s initial public offering (IPO).

Previously, Aussie Broadband estimated its EBITDA for the 2021 financial year, excluding IPO costs, would be $12.3 million.

The company said the updated guidance comes as it experiences strong growth in the average revenue per user in its retail segment. It’s also seen growth in its business segment.

According to Aussie Broadband, revenue is also expected to benefit from rebates related to the National Broadband Network (NBN).

Drop in estimated new customers

In further news that could be impacting the Aussie Broadband share price, the company stated it has lowered its residential connection guidance.

Previously, Aussie Broadband said it hoped to connect between 380,000 and 410,000 households to its services in the 2021 financial year. That figure has now been lowered to between 360,000 and 365,000.

The estimated drop comes as the onboarding of the first customers of Aussie Broadband’s white label solution is delayed until the 2022 financial year.

The company has also been affected by an increase in high-speed market competition caused by NBN’s Focus on Fast campaign. It has also been hit by recent connection issues caused by the NBN.

Aussie Broadband’s business customer connections look likely to achieve the lower-end figure of 37,000 provided in previous guidance – although its estimated top-end figure has decreased from 42,000 to 38,000.

In more positive news for Aussie Broadband (though, not for Victoria), the company expects its network utilisation to increase over the next 7 days due to the COVID-19 lockdown.   

White label solution

After tantalising the market in April by electing not to name its foundation white label solution customer, Aussie Broadband today announced it is Origin Energy Ltd (ASX: ORG).

As part of the white label solution, Origin Energy will sell Aussie Broadband’s NBN, Opticomm, and VoIP services under its own brand. Aussie Broadband will be providing customer support and service delivery for Origin’s telecommunication customers.

Aussie Broadband is in contact with other brands interested in being involved with its white label solution.

Optic fibre rollout

Finally, Aussie Broadband today advised its optic fibre network rollout is going to plan.

The company currently has more than 250 prospective optic fibre sales in its pipeline.

Once complete, the company’s fibre network will include 76 points of interconnections and more than 20 data centres. A point of interconnection is needed to connect a customer’s home to the NBN. Currently, it has almost completed a complex section of its Sydney build.

Aussie Broadband has begun construction of the network in Western Australia and Queensland and is continuing the rollout in New South Wales and Victoria. Work in South Australia is due to start in the coming weeks.

The company expects to have between 28 and 31 points of interconnection and data centres completed by 30 June.

Aussie Broadband share price snapshot

Aussie Broadband shares need today’s good news as they tackle a tough month on the ASX.

Since the start of May, the Aussie Broadband share price has fallen by around 12%.

Despite the poor month’s performance, the company’s shares are still up by around 34% year to date. They’ve also gained around 40% since their debut on the ASX in October 2020.

The company has a market capitalisation of around $500 million, with approximately 190 million shares outstanding.

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The S&P/ASX 200 Index (ASX: XJO) is trying to find its footing in what has otherwise been a volatile May. While the index might be trying to decide whether or not it wants to say above or below 7,000, these ASX200 shares have cruised to 52-week highs.

ALS Ltd (ASX: ALQ)

ALS could be described as a classic slow-moving ASX share. The global testing, inspection and certification company has a mixed history of financial results, with its fair share of both earnings misses and surprises. It managed to do the latter this week.

The ALS share price surged a rare 12.8% to $12.30 on Wednesday after the release of its full-year results. This not only marked a 52-week high, but a significant 9-year high. While many shares have had the tendency to give back their gains after a move up, the ALS share price has managed to stay near Wednesday’s highs, trading at $12.23 at the time of writing.

Codan Ltd (ASX: CDA)

The Codan share price could be one of the top-performing ASX shares this year, running a solid 68% year-to-date.

Its shares took a breather between August 2020 and February 2021, chopping largely between the $10 to $12 level. It wasn’t until the company acquired a US-based communications supplier in mid-February, that its shares jumped to a new all-time record high of $13.54. Its shares have been trending strongly ever since, marking higher highs and higher lows to another record high on Friday of $19.35.

Collins Foods Ltd (ASX: CKF)

A business that operates KFC and Taco Bell franchises isn’t exactly an ASX share you’d expect to see surging 15% in the last 7 trading sessions. The company hasn’t released any market sensitive announcements since December last year, where it delivered a solid set of half-year results.

Positive March retail turnover data from the Australian Bureau of Statistics (ABS) could be a factor to consider in the recent jump in the Collins Foods share price. The ABS advised that Australian retail turnover increased 1.1% from March 2021 to April 2021, seasonally adjusted.

The ABS especially noted that food retailing was a strong performer, increasing 1.5% following declines across both February and March 2021.

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In early afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a very strong gain. At the time of writing, the benchmark index is up 1.15% to 7,176.9 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

Inghams Group Ltd (ASX: ING)

The Inghams share price has jumped 9.5% to $3.44. Investors have been fighting to get hold of the poultry producer’s shares after it provided FY 2021 guidance well-ahead of the market’s expectations. For the 12 months ending 25 June, Inghams is forecasting statutory EBITDA of $438 million to $448 million and statutory net profit after tax of $80 million to $87 million. This has been driven by the benefits derived from operational efficiencies implemented throughout the year and improved trading conditions.

Latitude Group Holdings Ltd (ASX: LFS)

The Latitude share price is up 3.5% to $2.53. This follows the release of a market update. The instalments and lending company revealed that its loan volumes for the six months ending 30 June 2021 are expected to come in at $3.7 billion. This will be an increase of 7% on the prior corresponding period. Management expects this to lead to a first half net profit after tax of between $115 million and $120 million.

Rio Tinto Limited (ASX: RIO)

The Rio Tinto share price is up 3% to $123.74. This follows a similarly strong gain by its London-listed shares during overnight trade. Strong economic data appears to have given the resources sector a major lift today. At the time of writing, the S&P/ASX 200 Resources index is up 2.4%.

Tabcorp Holdings Limited (ASX: TAH)

The Tabcorp share price is up 2.5% to $5.19. The catalyst for this was news that BetMakers Technology Group Ltd (ASX: BET) has made a $4 billion offer to acquire Tabcorp’s Wagering and Media operations. The offer comprises $1 billion in cash and $3 billion in BetMakers shares. BetMakers believes the proposal would bring together two highly complementary businesses to create a competitive global wagering and technology platform with scalable operations across both B2B and B2C markets.

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At lunch on Friday, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week a strong note. The benchmark index is currently up 1.1% to 7,174.2 points.

Here’s what is happening on the market today:

BetMakers makes Tabcorp a $4 billion offer

The Tabcorp Holdings Limited (ASX: TAH) share price is pushing higher today after BetMakers Technology Group Ltd (ASX: BET) made a $4 billion offer to acquire its Wagering and Media businesses. The offer comprises $1 billion in cash and $3 billion in BetMakers shares. BetMakers believes the proposal would bring together two highly complementary businesses to create a competitive global wagering and technology platform with scalable operations across both B2B and B2C markets.

Latitude update

The Latitude Group Holdings Ltd (ASX: LFS) share price is storming higher after the release of a market update. The instalments and lending company revealed that its loan volumes for the six months ending 30 June 2021 are expected to come in at $3.7 billion. This will be an increase of 7% on the prior corresponding period. This is expected to lead to a first half net profit after tax of between $115 million and $120 million.

Link receives offer for PEXA

The Link Administration Holdings Ltd (ASX: LNK) share price is on course to end the week on a positive note. Investors have been buying the administration services company’s shares after it revealed that private equity firm KKR has tabled an offer that values PEXA at $3 billion on a 100% basis. Link owns 44.18% of the property settlement business. The Link Board is considering the proposal.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Friday has been the South32 Ltd (ASX: S32) share price with a 6% gain. A number of resources shares are recording strong gains today. The worst performer has been the CSR Limited (ASX: CSR) share price with a 5% decline. The majority of this decline is due to the building materials company’s shares trading ex-dividend this morning.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla Motors‘ (NASDAQ: TSLA) Model 3 sedan is losing some of its luster. The popular electric vehicle (EV) has been dropped by Consumer Reports as one of its Top Picks, and the Insurance Institute of Highway Safety (IIHS) plans to strip it of the organization’s Top Safety Pick+, its highest-level award.

These developments closely follow the company’s announcement earlier this week that it is replacing radar in the relatively low-cost model with the camera-based Tesla Vision system. It is doing the same with the Model Y SUV, again a comparatively budget offering in its category.

In the announcement Tesla warned that “For a short period during this transition, cars with Tesla Vision may be delivered with some features temporarily limited or inactive.” These include Autosteer and Emergency Lane Departure Avoidance.

This doesn’t sit well at all with safety proponents. In an article on the designation withdrawals, Consumer Reports quoted its Vice President of Advocacy David Friedman as saying that “If a driver thinks their vehicle has a safety feature and it doesn’t, that fundamentally changes the safety profile of the vehicle.”

“It might not be there when they think it would save their lives,” he added.

Tesla hasn’t yet responded directly to the Consumer Reports and IIHS moves, and since it likes to control the message it likely won’t. Regardless, the loss of those prestigious designations just isn’t a good look for the carmaker, which continues to have numerous issues with vehicle safety of late.

Still, the company and its stock have a great many believers no matter the prize count in its trophy case. The shares traded 1.9% higher on Thursday, eclipsing the 0.1% gain of the S&P 500 index.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Cann Group Ltd (ASX: CAN) share price is falling during morning trade. This follows the cannabis company’s announcement of a revised revenue guidance for FY21.

At the time of writing, Cann shares are exchanging hands for 43 cents, down 2.27%.

What’s dragging the Cann share price down?

Investors are selling off Cann shares today after digesting the company’s update.

In today’s release, Cann advised that a number of delays have affected its revenue guidance for FY21.

In particular, third-party manufacturing and starting material supplier issues have pushed back its shipping schedule. This means that customers will receive Cann products at a later date than originally expected, resulting in deferred revenue receipts.

The company also noted that its international regulatory submissions to enter new markets has been extended. This relates to both local and overseas market clearances. However, Cann is working hard to have its order and fulfilment cycle more streamlined, especially to Germany.

As a result, Cann is forecasting revenue to fall between $4 million and $5 million for FY21. This compares to its earlier revised guidance projections of $8 million to $10 million on 15 February. The remaining balance of the latter revenue assumption is expected to roll into FY22.

At the end of April, the group dispatched more than 20,000 bottles of cannabis extract to its German customer and partner, iuvo Therapeutics. Those products have since been GMP-released for sale, with the company stating that initial sales look promising.

Furthermore, its United Kingdom market is tracking along nicely, with a pipeline of orders scheduled in FY22.

Words from the CEO

Cann group CEO Peter Crock touched on the company’s performance, saying:

We have continued to make really important headway this year, and while timelines have been frustratingly drawn out, in some part due to COVID, the achievements we have made in securing regulatory pathways, and the foundations we have set for supply to Australian patients and export markets stands us in good stead.

We have also strengthened our future revenue base with the recent acquisition of Satipharm and access to an important differentiated technology platform. Further, we have demonstrated an ability to deliver sizable orders to our customers, as shown by our delivery to iuvo last month.

Cann shares have been on a steady decline over the past 12 months, shrinking in value by more than 60%.

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The Select Harvests Limited (ASX: SHV) share price is sliding today after the company released its results for the 6-months up to 31 March 2021.

At the time of writing, shares in the fruit and nut grower are trading for $5.80 each – down 2.68%. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is 0.84% higher.

Let’s take a closer look at the numbers and what they mean for the Select Harvests share price.

Select Harvests share price falls with profits

For the first half of FY21, net profit after tax collapsed 92.7% from the prior corresponding period (pcp) to $1.27 billion. Total revenue actually increased 37.4% to $84.8 billion in the period.

Cost of sales, however, shot up 71.8% at the same time. Select Harvests attributed the rising revenue to more crop harvests (and therefore sales). At the same time, the company claims the increase in costs outpaced revenue because of higher water rights prices. Water rights prices are lower this year and the company expects this to flow through to the next financial report.

In today’s release, Select Harvest was also pessimistic about the future prices of almonds, its main product. The company says almond prices are set mostly by output from California. It is expecting supply from the state to increase into the next year, thus hampering the almond price.

The price of almonds was already down 20% on the pcp to $6.00 a kilogram.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) are down 62.9% on the pcp to $12.8 million. Earnings per share (EPS) sunk 94.3% to 1.1 cents and, unsurprisingly, no interim dividend was paid.

Management commentary

Select Harvests managing director Paul Thompson said of today’s results:

As anticipated, lower global almond prices have negatively impacted earnings, delivering a first half financial result well below recent prior periods.

With a record breaking 2020 Californian crop and a USDA Subjective Almond Estimate indicating another large crop this year, we are anticipating low levels of pricing for the remainder of 2021.

Looking forward to the 2022 crop, our tree health remains good with strong 2021 vegetative growth and high bud load. Water prices are expected to remain relatively low given current weather forecasts and storage levels. Global demand for almonds continues to increase at a steady rate, as plant-based protein consumption grows in all markets.

Select Harvests share price snapshot

Over the past 12 months, the Select Harvests share price has decreased 11.42%. Before the COVID-induced market sell-off of March 2020, company shares ended a trading day as high as $9.18 at the beginning of that year.

Given its current share price, Select Harvests has a market capitalisation of $679 million.

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The Telstra Corporation Ltd (ASX: TLS) share price is edging higher on Friday morning.

At the time of writing, the telco giant’s shares are up 0.5% to $3.48.

This latest gain means the Telstra share price is now up 16% since the start of the year.

Can the Telstra share price keep pushing higher?

According to one leading broker, the Telstra share price could continue to rise from here.

A note out of Goldman Sachs reveals that its analysts have been looking at the telco sector and have ultimately retained their buy rating and $4.00 price target on the company’s shares.

Based on the latest Telstra share price, this price target implies potential upside of 15% over the next 12 months excluding dividends. If you include the 16 cents per share dividend the broker is forecasting, this potential return stretches to 19.5%.

What did Goldman say?

Goldman Sachs has been looking at current trading conditions in the mobile and fixed markets. And while it feels that the company’s mobile deal with JB Hi-Fi Limited (ASX: JBH) could be limiting market repair, it isn’t enough to impact its forecasts or recommendation.

Speaking about the mobile market, Goldman said: “VOD [Vodafone] extended the discounts on its Red Postpaid plans for an extra week, now expiring June 3. We expect this reflects VOD intention to see what TLS does with its JBH promotions, given that the $800 gift card / $99 TLS plan expires on June 2 (VOD & Optus have both criticized these promotions as preventing market repair).”

It also notes that the recent SingTel result appears to indicate that mobile pricing is increasing and will be sustained.

The broker said: “Commentary on SingTel FY21 result was positive, suggesting higher mobile pricing in Australia is here to stay as the business focuses on improving profitability; and Optus returned to postpaid sub growth following 12m of declines; however, we expect TPG declines have continued YTD given border restrictions.”

What about the fixed market?

Goldman points out that NBN pricing has lifted modestly across the NBN 50 speed plans. Though, it feels Telstra could be more aggressive with its fixed wireless plans.

It explained: “We note rational pricing across the NBN 50 speed plans (+1% yoy) and an increased focus on the high speed plans (250mbps/1gbps) which we estimate to be more profitable and margin accretive to RSPs (i.e., increasing TLS margins from c.9% (NBN50) to 29% (NBN1GB)). Telstra also announced it will increased Fixed Wireless plans to 1TB – which although positive, is not nearly as aggressive as we believe the industry should be (we would expect meaningful promotions/discounts to accelerate migration).”

In light of the above, Goldman continues to prefer Telstra over rival TPG Telecom Ltd (ASX: TPG).

Its analysts have retained their neutral rating and cut their price target on TPG’s shares by 5% to $5.90.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

GameStop‘s (NYSE: GME) stock price recovery from single-digit levels began with a short squeeze inspired by Reddit’s WallStreetBets blog site. Outsized enthusiasm for the stock has offered a needed lifeline to GameStop, enabling it to raise capital and revive its ailing retailing business.

While this move increases the odds of GameStop’s survival, its business model and financials indicate limited further upside. That strongly suggests the stock is overpriced. Here’s why.

Competitive advantage and GameStop

The retailer previously built a competitive advantage as a one-stop-shop for all things gaming, especially electronic gaming. Customers could visit GameStop to find the latest video games, get refurbished hardware, and buy, sell, or trade games. However, the rise of downloadable video game sales slowly made GameStop an unnecessary middleman as gamers could buy games and upgrades more easily directly from manufacturers.

Nonetheless, some good news for GameStop has resulted. GameStop has used its capital to transform itself primarily into a “digital-first, omnichannel retailer.”

Also, it has replaced much of its previous executive management team, removing both the CEO and CFO. Experienced internet retail leaders such as incoming chairman of the board Ryan Cohen has joined the company. Cohen previously co-founded online retailer Chewy. Additionally, to adapt its buy-sell-trade business to a world of video game downloads, it has ventured into collectibles, board games, and other items.

Unfortunately, this move may also leave GameStop with a less significant competitive advantage. The collectibles business has existed for decades. While GameStop can serve as a name-brand outlet for such a business, it holds little discernible advantage outside of the GameStop name.

Moreover, one can say the same for its core game download business. Yes, it can aggregate available games from each of the manufacturers onto its website. For example, Microsoft (NASDAQ: MSFT) has agreed to give GameStop a cut for each Xbox game sold on its site. Still, investors have little visibility on the percentage GameStop receives. Furthermore, when comparing the Xbox site versus GameStop, the games sell for the same price, leaving GameStop with no advantage there.

GameStop, financially speaking

GameStop’s financials offer a mixed picture. In fiscal 2020, net sales fell 21% to just under $5.1 billion. However, due to dramatically lower cost of goods sold, more modest operating costs, and an income tax benefit, its net loss improved to just $215 million. GameStop lost $471 million in 2019.

Moreover, fourth-quarter fiscal 2020 net sales fell by only 3% from year-ago levels. GameStop also earned a before-tax profit of $11 million in that quarter. This time, it experienced higher operating costs that prevented it from coming close to the $69 million quarterly before-tax profit in Q4 2019.

The company did not publish an outlook. Nonetheless, even with the stock’s volatility, one cannot escape the 4,200% return the Reddit-inspired short squeeze helped bring to the company.

GME data by YCharts

However, this gain brings bad news from a valuation sense. While its 2.4 price-to-sales ratio may not appear high, it now sells for more than 29 times its book value. In comparison, Best Buy sells for six times its book value, and even Amazon boasts a price-to-book value ratio of only 16.

Still, since the stock trades in the $185 per-share range as of the time of this writing, it has raised funds by issuing shares. Now, almost 71 million shares have become available, up from 65 million in March. While this strategy can help save the company, shareholders pay the price in the form of less valuable shares. Worse, this dependence confirms that the stock remains in survival mode with no obvious path for prosperity.

The bottom line

The massive run-up in GameStop stock and the strategic shift to online sales may have saved GameStop. Now, GameStop holds the needed funding to make its digital-first transformation a reality.

However, survival is not prosperity, and with a weak competitive advantage, it could struggle to maintain its valuation long term. While it is not “game over” for GameStop, long-term investors will more likely win with other internet-centric retail stocks.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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