Tag: Motley Fool

Aussie Broadband Ltd (ASX: ABB) shares have been rising in April, though investors may have noticed that the telco’s managing director Phillip Britt is selling over a million dollars of shares.

For investors that haven’t heard of Aussie Broadband, it’s a telco and technology company that has been operating since 2008, with its headquarters based in Morwell in Victoria.

The company has a broad range of customers including residential, business, enterprise and government customers, and provides wholesale access to other telcos and managed service providers.

Aussie Broadband is the 5^th largest provider of broadband services in Australia – it has a wholesale agreement with NBN Co, while also having its own fibre network and some leased backhaul infrastructure from third parties.

Aussie Broadband share sales

On 3 April 2023, it was announced by the telco that managing director Phillip Britt had sold 268,602 shares and would sell up to a further 231,398 shares over the next month.

Aussie Broadband explained that the proceeds would be used to “fund tax obligations”.

Another reassuring factor to consider is that the sale and potential sales represented a total of 3% of Phillip Britt’s total holding of Aussie Broadband shares.

The company said that he remains a “substantial shareholder of the company”.

Prior to the share sale, the entity he’s involved with called Digital Interworks Pty Ltd held 16.25 million Aussie Broadband shares and after the latest sale announcement that entity held 15.75 million shares – his entity has sold 500,000 Aussie Broadband shares, which is how much Aussie Broadband said he would.

Reasons to remain optimistic

The share sale only represents a small portion of the overall holding, so Britt is still highly aligned with ordinary shareholders.

Plus, investors can only go off the latest result to understand the company’s operating performance.

In the FY23 half-year result, it revealed revenue growth of 27% to $379 million and earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 86% to $41.1 million. It was helped by an increase in the gross profit margin of 2.5 percentage points to 34.9%.

Total broadband connections increased by 27% to 635,200, while its NBN market share grew from 5.66% to 7.01%.

In April 2023, the Aussie Broadband share price has gone up by close to 7%.

Foolish takeaway

The business is seeing ongoing growth, increasing profitability and a stronger market share. Britt is still highly invested in the business. Investors can remain positive about the company’s prospects.

The post Why has the Aussie Broadband boss sold off $1.6 million of shares in April? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Are Aussie Broadband shares capable of another bull run?
• 2 fresh-faced ASX shares that could leave investors smiling 10 years from now
• ‘Rerating likely’: 2 ASX shares to buy before they take off

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. has positions in and has recommended Aussie Broadband. The Motley Fool Australia has recommended Aussie Broadband. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/2o98KYL

One top broker has reportedly slashed its share price target for All Ordinaries Index (ASX: XAO) gold miner St Barbara Ltd (ASX: SBM) by more than 30%.

The downgrade came after a transformational takeover deal was reworked to become a $600 million sale earlier this week.

Right now, the St Barbara share price is 56.5 cents, 3.67% higher than its previous close.

For comparison, the All Ords is marginally lower at 7,556.1 points at the time of writing.

So, what’s got one broker feeling bearish on the ASX All Ords gold stock? Let’s start at the beginning.

St Barbara’s merger deal wiped from the table

St Barbara announced its plan to merge with peer Genesis Minerals Ltd (ASX: GMD) to create a new company, Hoover House, late last year.

Hoover House would take on St Barbara’s cornerstone Leonora assets, with its remaining projects spun out.

However, that plan was scrapped following St Barbara’s $407 million first-half loss, a downgrade to Leonora’s full-year production guidance, and the scrapping of its all-in sustaining cost (AISC) outlook.

Instead, the pair decided Genesis will instead purchase the Leonora assets in a $600 million, part-scrip deal.

Leonora was responsible for more than half of St Barbara’s gold production last half, producing 66,253 ounces of the group’s 124,676-ounce production.

Ord Minnett slashes price target on ASX All Ords gold stock

That’s left broker Ord Minnett disappointed, The Australian reports. Senior research analyst Paul Kaner was quoted, saying:

Unfortunately, SBM (and its shareholders) are left with few alternatives to this deal, given its strained balance sheet ($112m net debt at March 31), lower expected cash flows from Gwalia/Atlantic and the increase in the Environmental Performance bond at Atlantic (from C$41m to C$70m).

Kaner continued, saying the company will be “a different investment proposition” following the sale: “going from producer in a tier 1 jurisdiction to a developer in PNG and Nova Scotia”.

The company will still hold its Atlantic operation, located in Nova Scotia, following the sale. The operation reached commercial production in 2018 while three nearby projects are being developed at Fifteen Mile Stream.

It will also walk away with its Simberi operation in Papua New Guinea where it’s working on an upcoming sulphide project.

But the projects apparently don’t impress Ord Minnett.

The broker has reportedly slashed its price target on St Barbara shares by 31% to 48 cents. That suggests the All Ords stock could fall 15%. It’s also said to have dropped its rating on the stock to lighten.

The post Guess which ASX All Ords stock has just had its share price target slashed 30% by a top broker appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why has the shine come off ASX gold shares this week?
• Are these ASX All Ords shares ready to buy at fundamentally fire sale prices?
• Why Ramelius, Sayona Mining, St Barbara, and Woodside shares are dropping today
• 3 ASX All Ords shares going gangbusters on Tuesday
• Why AMA, New Hope, Regis Resources, and St Barbara shares are dropping

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 Scott Phillips.

from The Motley Fool Australia https://ift.tt/wN0dFes

If you’re looking to strengthen your portfolio with some new ASX 200 shares, then you may want to consider the two listed below. Both have recently been named as buys by analysts.

Here’s what they are saying about these ASX 200 blue chip shares:

Qantas Airways Limited (ASX: QAN)

The first blue chip ASX 200 share that has been named as a buy is Australia’s flag carrier airline, Qantas.

Goldman Sachs is a big fan of the company and has been very impressed with its transformation since the pandemic. This is something the broker believes the market is underappreciating. As a result, it sees significant value on offer with its shares. It commented:

While we acknowledge broader macro uncertainty at this point in the cycle, we believe that the -7% share price reaction on results day (and the current share price) does not reflect the group’s improved earnings capacity. Notwithstanding a decline in unit revenues (and group capacity still at 96% of pre-COVID), our estimated FY24e EPS sits 65% above pre-COVID levels. Despite this, QAN’s market capitalisation is only 10% above pre-COVID levels (EV 8% lower).

Goldman has a conviction buy rating and $8.30 price target on its shares.

Telstra Corporation Ltd (ASX: TLS)

Another ASX 200 share that is rated highly by analysts is telco giant Telstra.

Morgans is very positive on the company. This is due to favourable industry conditions, its successful transformation, and the potential for value to be unlocked from asset sales. It explained:

Telco has the strongest tailwinds in a decade with an increasingly rational market, price rises across the majors and the criticality of telco increasingly recognised. The last major mobile operator Vodafone/TPG increased mobile prices by ~$5 per month in January 2023 and all key players are behaving economically rational. This combines with catalysts including the potential for InfraCo value release following the legal restructure.

Morgans currently has Telstra on its best ideas list with an add rating and $4.70 price target.

The post Buy Qantas and this blue chip ASX 200 share: analysts appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• No savings at 40? I’d invest $5 a day in ASX shares for passive income of $7,800 a year
• Why I think Telstra shares could be a top buy for passive income in 2023 and beyond
• Why is the Qantas share price having such a strong start to the week?
• Buy these ASX 200 shares for huge returns: brokers
• Here are the 3 most heavily traded ASX 200 shares 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. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/vdE8AHb

Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a number of broker notes this week.

Three ASX shares brokers have named as buys this week are listed below. Here’s why they are bullish on them:

BHP Group Ltd (ASX: BHP)

According to a note out of Morgans, its analysts have upgraded this mining giant’s shares to an add rating with an improved price target of $51.10. The broker made the move on the belief that iron ore has come out of a slump in great shape. It highlights that China iron ore stockpiles at port remain at healthy levels, which suggests increased iron ore imports are being consumed. All in all, the broker recommends that investors accumulate the big miner on any weakness. The BHP share price is trading at $47.37 today.

Core Lithium Ltd (ASX: CXO)

A note out of Macquarie reveals that its analysts have retained their outperform rating and lifted their price target on this lithium miner’s shares to $1.20. This follows news that Core Lithium has made a significant increase to its mineral resource estimate for the Finniss project. Macquarie was pleased with the news and notes that there could be further increases coming thanks to its drilling campaign. The Core Lithium share price is fetching $1.03 on Wednesday.

REA Group Ltd (ASX: REA)

Analysts at Goldman Sachs have retained their conviction buy rating on this property listings company’s shares with an improved price target of $164.00. Goldman notes that FY 2024’s price increases are more material than expected. The broker believes this demonstrates the pricing power of the real estate classified vertical. The REA share price is trading at $141.16 today.

The post Top brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why are ASX 200 mining shares like Fortescue smashing the index today?
• If house prices have bottomed, should I buy property-related ASX shares?
• Here’s the latest forecast for ASX 200 lithium stocks from UBS
• This ASX 200 share can hit a new 52-week high: Goldman Sachs
• How much to invest in ASX shares to get $500 in dividends every month

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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/jie31ZX

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a tiny gain. At the time of writing, the benchmark index is up a fraction to 7,362.2 points.

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

AMP Ltd (ASX: AMP)

The AMP share price is up 3% to $1.13. This follows the release of the financial services company’s quarterly update. AMP reported growth in both its bank loan book and its asset under management. The latter grew $2 billion to $126.2 billion for the Australian Wealth Management business.

EML Payments Ltd (ASX: EML)

The EML share price is up a further 19% to 80 cents. Investors have been buying this struggling payments company’s shares this week after it announced the exit of its CEO and the scrapping of its previously announced strategy. Investors appear to believe this was the right move by EML.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is up 4% to $4.11. This may have been driven partly by the release of a broker note out of UBS on Tuesday. That note saw the broker upgrade this lithium miner’s shares to a buy rating with a $4.60 price target. While UBS has reduced its near term lithium forecasts, it has boosted its long term assumptions.

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix share price is up a further 5.5% to $9.39. This pharmaceutical company’s shares have been on fire this week following the release of its quarterly update. Telix reported first quarter revenue of $100.1 million. This was up massively from $3.7 million a year earlier and 27% from $79 million in the fourth quarter of FY 2022.

The post Why AMP, EML, Pilbara Minerals, and Telix shares are racing higher today appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why is ASX 200 stock Telix Pharmaceuticals suddenly so hot?
• Capital deities and destroyers: The best and worst at putting money to work among ASX 200 shares
• AMP share price marching higher as net outflows ebb
• Here’s the latest forecast for ASX 200 lithium stocks from UBS
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has positions in Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended EML Payments. The Motley Fool Australia has positions in and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/v7jlYNe

ASX 200 stock Telix Pharmaceuticals Ltd (ASX: TLX) has been having a top run on the market lately.

Telix shares have risen nearly 32% in a month and are currently fetching $9.30. In today’s trade, Telix shares are up 4.44%. In contrast, the S&P/ASX 200 Health Care Index (ASX: XHJ) is down 0.31% today.

Let’s take a look at what has been weighing on the Telix share price recently.

What is going on?

Telix is a global clinical-stage biotechnology developing targeted radiation therapy to treat cancer.

Investors appear to have reacted to multiple price-sensitive updates delivered to the market in the last month.

Telix recently revealed its customer receipts lifted 15% during the first quarter of 2023 to $83.2 million. Revenue rose 27% to $100.1 million.

A major highlight of these results was news that the US market demand for the company’s Illuccix diagnostic imaging agent for prostate cancer is continuing to grow. Revenue from US sales of Illuccix rose 27% quarter on quarter to $97.5 million. This follows the US Food and Drug Administration (FDA) expanding the label indication for Illuccix as advised in March.

On 17 April, Telix announced the successful preclinical development of radiolabelled Olaratumab. This is an antibody licenced from Eli Lilly and Company (Lilly). The company said:

Telix has demonstrated proof-of-concept (PoC) of using olaratumab to selectively deliver both diagnostic and therapeutic radiation to tumours as a radiopharmaceutical moiety and has produced a candidate for clinical translation.

Telix will now progress to first-in-human clinical studies based on these highly encouraging results.

In early April, Telix shares rose amid progress on making Illuccix available in the UK and Europe. Illuccix is already approved for use in Australia, the United States, New Zealand and Canada. Telix filed a Marketing Authorisation Application (MAA) for Illuccix in the United Kingdom.

Telix also noted it is processing a separate MAA application for the European Union. The company’s EMEA CEO Raphael Ortiz said:

Telix is committed to ensuring widespread access to commercially available gallium-based PSMA-PET imaging across the EU and UK.

Telix share price snapshot

The Telix Pharmaceuticals share price has returned 91% in the last year.

This ASX 200 stock has a market capitalisation of about $2.9 billion.

The post Why is ASX 200 stock Telix Pharmaceuticals suddenly so hot? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why AMP, EML, Pilbara Minerals, and Telix shares are racing higher today
• Capital deities and destroyers: The best and worst at putting money to work among ASX 200 shares
• Here are the top 10 ASX 200 shares today
• 3 ASX All Ords shares going gangbusters on Tuesday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Monica O’Shea 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 Scott Phillips.

from The Motley Fool Australia https://ift.tt/FSrZjuG

The S&P/ASX 200 Index (ASX: XJO) is on course to record the smallest of gains. In afternoon trade, the benchmark index is up a fraction to 7,360.6 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price is down 3% to 43.2 cents. This is despite there being no news out of the semiconductor company. However, it could be that short sellers are increasing their positions ahead of the upcoming release of this meme stock’s quarterly update.

Domain Holdings Australia Ltd (ASX: DHG)

The Domain share price is down 3% to $3.31. On Tuesday, analysts at Goldman Sachs downgraded this property listings company’s shares to a neutral rating with a $3.65 price target. The broker sees risks from vendors potentially downgrading marketing spend on one portal over time. It feels Domain is the more likely option for vendors to reduce spending on, rather than the dominant realestate.com.au platform.

Star Entertainment Group Ltd (ASX: SGR)

The Star share price is down 8% to $1.25. Investors have been selling this casino and resorts operator’s shares after it released a trading update. The company warned that it is experiencing a significant and rapid deterioration in operating conditions. This is particularly the case at The Star Sydney and The Star Gold Coast. In response, Star announced significant cost and restructuring initiatives.

Tietto Minerals Ltd (ASX: TIE)

The Tietto share price is down 5% to 66.7 cents. This is despite the gold miner releasing an update on the mineral resource of its Abujar project in the Ivory Coast. Investors may have been expecting more than the 10% increase in resource size to 3.83Moz.

The post Why Brainchip, Domain, Star, and Tietto shares are dropping today appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Capital deities and destroyers: The best and worst at putting money to work among ASX 200 shares
• Star Casino share price crumbles 8% on ‘significant and rapid deterioration’
• If house prices have bottomed, should I buy property-related ASX shares?
• Here are the top 10 ASX 200 shares today
• These are the 10 most shorted ASX shares this week

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 Scott Phillips.

from The Motley Fool Australia https://ift.tt/N07ISeA

The Insurance Australia Group Ltd (ASX: IAG) share price is continuing its recent strong run today.

Shares in the S&PASX 200 Index insurance stock are up 0.2% to $4.96. That puts the stock up 10.5% over the past month.

But could storm clouds be gathering over the IAG share price?

Headwinds on the horizon for the IAG share price?

Concerns are being raised that the insurance giant may downgrade its full-year insurance margin guidance. Those concerns stem from the massive and costly destruction left in the wake of Cyclone Gabrielle, which struck New Zealand in February.

The New Zealand government forecasts the total cost of the killer storm will be more than $10 billion. And fund managers are running their slide rules over the IAG share price, as the company has yet to update the ASX on the looming cost of claims from the storm.

To be clear, the insurer did offer an update on the cyclone damage on 3 February. It reported it had received more than 15,000 claims at that time across its AMI, State, NZI and partner brands.

Highlighting the company’s reinsurance provisions, IAG CEO said:

Premium rates continue to increase in response to claims inflation and in anticipation of additional reinsurance and natural perils costs. Our retention rates have remained at very high levels.

The IAG share price closed down 2.1% on the day.

What are fund managers saying?

Tribeca Investment Partners portfolio manager Jun Bei Liu is among the fundies forecasting a downgrade in IAG’s guidance.

According to Liu (courtesy of The Australian):

It’s going through some challenging times and, even though underlying commercial [insurance] rates are very strong, the challenge is that with natural disasters it just means they’re under-provisioned … it’s really catching up with them.

You’re looking at an earnings downgrade. It’s coming.

Wilson Asset Management, on the other hand, doesn’t believe a guidance downgrade is imminent. WAM contacted IAG directly and was satisfied with the level of disclosure.

According to Wilson’s equity analyst Anna Milne:

Although we have had some of these high-profile storms and cyclones in the likes of New Zealand, they were in relatively low-density areas and Australia has had a relatively benign period, and so in terms of materiality on their P/L [profit and loss statement] they don’t deem it worthy of updating the market … we were comfortable with that level of disclosure.

Milne said the insurer was likely capable of weathering the New Zealand storm without downgrading its guidance. And maintaining guidance should help support the IAG share price in the weeks ahead.

“They’ve recently really ramped up the amount of premium rate [increase] they are pushing through,” she noted.

As The Australian reports, an IAG spokesman said the company had received some 45,000 claims related to the Auckland and North Island floods and Cyclone Gabrielle.

“Approximately 25,000 claims were due to the Auckland and North Island floods, the remainder due to Cyclone Gabrielle,” he said.

The spokesman added:

We’re dedicated to providing our investors and the market with all relevant information, in line with our continuous disclosure obligations, and have outlined the maximum financial impact of these severe weather events under our reinsurance.

IAG share price snapshot

As you can see in the chart below, the IAG share price has strongly outperformed the benchmark over the past 12 months, gaining 13%. The ASX 200 is down 3% over that same time.

The post Are dark clouds gathering over the IAG share price? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Did you buy $4,000 of IAG shares 5 years ago? Here’s how much passive income you’ve earned
• Why the IAG share price outperformed the ASX 200 in March
• Is IAG stock a good defensive ASX 200 buy right now?
• Insurance companies are raking it in, so should you buy ASX 200 shares like IAG right now?
• The IAG dividend is being paid today. Here’s the latest

Motley Fool contributor Bernd Struben 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 Scott Phillips.

from The Motley Fool Australia https://ift.tt/YCpjKGR

Trawling through shares in the S&P/ASX 200 Index (ASX: XJO), we can at times forget what actually creates wealth for shareholders in the long run.

While the share price moves arbitrarily in the short term, the decisions on how to invest company capital are what truly drive value creation over a prolonged holding period. You won’t find many businesses sustaining their existence if tipping in $1 means getting 20 cents in return — that’s fundamentally what return on capital employed (ROCE) measures.

In simplistic terms, return on capital shows investors how profitable and capital efficient a company is. Unlike return on assets or return on equity, ROCE takes into account both debt and equity for funding operations, providing a more complete picture.

All that’s left to do now is find out which ASX 200 shares ranked the best and worst at providing a return on their capital.

Wizards of capital deployment

Before we get underway, it’s probably helpful to provide a baseline to put the following data into perspective. A 20% return on capital is generally considered ‘good’. Though, this differs from industry to industry.

Popping the locks on the highest return on capital across ASX 200 shares over the past year, we are inundated by commodity-focused companies.

Although many commodities — such as lithium and coal — have drastically retreated recently, these materials are still fetching prices far above historical averages. As long as expenses haven’t grown at the same rate, the outcome is boosted returns on capital.

The index constituents taking out top spots on the podium are listed in the table below:

Company	Return on capital	Market capitalisation
Deterra Royalties Ltd (ASX: DRR)	250.4%	$2.55 billion
Pilbara Minerals Ltd (ASX: PLS)	76.0%	$11.96 billion
Whitehaven Coal Ltd (ASX: WHC)	68.1%	$6.12 billion

By digging up historical return on capital data for these three ASX 200 shares, it becomes even more evident that the face-melting returns are only a recent feature of these particular companies.

Prior to commodities booming, Pilbara Minerals and Whitehaven Coal were achieving subpar returns on capital, as depicted below.

Boasting a return on capital percentage above 175% for three years running, Deterra Royalties is an extreme outlier among the bunch. We can attribute this to the lucrative business model of royalties.

Once royalty rights are acquired, there is very little in the way of additional capital needed to derive considerable profits.

ASX 200 shares igniting capital

Unfortunately, not every company’s capital efficiency is as healthy.

Whether through poor choices or playing the long game, many ASX-listed companies are pouring capital into the engine to no avail — at least not in the past 12 months…

The worst returns on capital among ASX 200 shares are the following:

Company	Return on capital	Market capitalisation
Telix Pharmaceuticals Ltd (ASX: TLX)	-96.1%	$2.97 billion
Brainchip Holdings Ltd (ASX: BRN)	-60.6%	$777.8 million
Chalice Mining Ltd (ASX: CHN)	-32.7%	$3.01 billion

There’s a common denominator between the three poorest performers — all of them are still exploring.

While Telix Pharmaceuticals is exploring new cancer detection methods and treatments, Chalice Mining is exploring for more minerals in Western Australia. Meanwhile, AI-chip developer Brainchip is exploring new technologies.

The process of exploration for any company comes at a high cost. If the business does not already have a profitable revenue source, the return on capital suffers.

A quick look at the historical return on capital data for the worst names on the list shows a track record of chewing up capital, as shown above.

However, this doesn’t mean these ASX 200 shares can’t be wealth creators in the future. For example, Telix’s trailing 12-month revenues have surged to $160 million from $7.6 million in the space of one year. Additionally, the company recently reported its second consecutive quarter of positive cash flow.

Foolish takeaway

It can be interesting to look at which companies are posting great, and not-so-great, returns on capital as of right now.

Despite the usefulness of this fundamental metric, it’s important not to necessarily invest in certain ASX 200 shares purely based on the latest return on capital figures. I say this because the metric can change over time, and what is wildly capital efficient at present may not be five years from now.

The key is to identify those few high-quality companies that could deliver consistently high returns on capital. As they say, consistency is key, as opposed to a one-hit-wonder.

The post Capital deities and destroyers: The best and worst at putting money to work among ASX 200 shares appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here’s the latest forecast for ASX 200 lithium stocks from UBS
• Broker names 2 high yield ASX dividend shares to buy
• Here are the top 10 ASX 200 shares today
• Here’s the forecast for popular ASX 200 mining shares from UBS
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

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

from The Motley Fool Australia https://ift.tt/KOFmkDN

The Star Entertainment Group Ltd (ASX: SGR) share price is collapsing after the casino operator revealed “a significant and rapid deterioration in operating conditions”.

In response, it’s cutting 500 jobs, freezing salaries, scrapping bonuses, and has downgraded its earnings outlook for this financial year.

Additionally, a strategic review of The Star Sydney, conducted with Barrenjoey Capital Partners, has been launched in a bid to maximise shareholder value.

The Star Entertainment share price is plummeting 7.99% to trade at $1.265 at the time of writing.

Let’s take a closer look at the news driving the Star Casino operator’s stock lower on Wednesday.

Star stock crashes as casinos struggle

The Star Entertainment share price is tumbling on Wednesday. Its fall comes as the company revealed its casinos – particularly its Sydney and Gold Coast operations – are suffering under the weight of regulatory restrictions and weak consumer spending.

As a result, its earnings performance is at unprecedented low levels, excluding the COVID-19 period.

If that continues without reprieve, its full-year underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) will likely be between $280 million and $310 million.

That’s down from previous guidance of between $330 million and $360 million. It compares against the $200 million EBITDA the company posted for the first half.

Today’s downgraded guidance includes the impact borne by employees. However, it excludes provisions for fines, costs from ongoing regulatory reviews, and expenses from its cost initiatives.

The casino operator was hit with two $100 million fines from Queensland and NSW last year. Its casino licence was suspended in both states and a manager was appointed to operate the casinos while it remediates its businesses.

Star Entertainment said job cuts and a freeze on salaries and bonuses, along with $40 million of operational initiatives, should reduce its operating expenditure by $100 million annually.

The steps are “independent of any potential impact from the proposed casino duty rate increases in NSW,” the company said.

And that’s not all.

The ASX 200 casino operator is also progressing with the sale of the Sheraton Grand Mirage Resort Gold Coast. Bids from interested parties are expected to be received shortly.

On top of that, it’s working to refinance its debt.

Finally, it plans to discuss casino duty taxes and flexible payment terms for penalties with state governments in NSW and QLD, as well as AUSTRAC.

Star Entertainment underperforms ASX 200

Today’s tumble is just the latest to dint the Star Entertainment share price.

It’s dumped 25% so far this year. It’s also currently 57% lower than it was this time last year.

For comparison, the ASX 200 has risen 6% year to date and has fallen 3% over the last 12 months.

The post Star Casino share price crumbles 8% on ‘significant and rapid deterioration’ appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

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 Scott Phillips.

from The Motley Fool Australia https://ift.tt/pGxFgst