Tag: Motley Fool

The Kogan.com Ltd (ASX: KGN) share price is pushing higher on Wednesday after providing more details on its third quarter update.

At the time of writing, the ecommerce company’s shares are up 3% to $10.43.

What did Kogan announce?

This morning Kogan released a response to an ASX query.

Judging by the contents of the release, it appears as though the share market regulator was unimpressed with some of the vague statements in Kogan’s third quarter update last week.  

In case you missed it, Kogan released its third quarter update and revealed that:

• Gross Sales grew by more than 47%
• Revenue grew by more than 65%
• Gross Profit grew by more than 54%
• Adjusted EBITDA declined by more than 24%

What did the ASX say?

Listed below are a selection of ASX queries and Kogan’s answers.

“Please clarify the measured percentage increase in Gross Sales for 3QFY21 by providing the actual amount of Gross Sales separately for Kogan.com and Mighty Ape in 3QFY21, and the actual amount of Gross Sales for Kogan.com in the prior corresponding period 3QFY20”

Kogan revealed that gross sales grew 47.7% to $271.5 million during the third quarter. This comprised a 32.8% increase in gross sales from Kogan.com and the addition of $27.5 million sales from the acquired Mighty Ape business.

“Please clarify the measured percentage decrease in Adjusted EBITDA in 3QFY21 by providing the actual Adjusted EBITDA amount for the Kogan Group in 3QFY21, and the actual amount of Adjusted EBITDA in 3QFY20.”

The company advised that adjusted EBITDA fell 24.8% to $7.2 million. This comprises $5.5 million EBITDA from Kogan.com (down 42.7%) and $1.7 million of EBITDA from Mighty Ape.

Kogan was also asked to provide details on the adjustments it referenced. These adjustments include $0.1 million of unrealised FX losses, $6.3 million in equity-based compensation, $3.9 million for demurrage, and $5.1 million relating to the Mighty Ape acquisition.

“Please clarify the measured percentage increase in Revenue in 3QFY21 for Exclusive Brands; Third Party Brands; Market Place; and Kogan Mobile, by providing the actual amount of Revenue in each category in 3QFY21 and 3QFY20.”

This was an interesting one as details on these revenues are hard to come by.

Kogan revealed that Exclusive Brands revenue grew 63.9% to $88 million, Third-Party Brands revenue increase 13.6% to $60.1 million, Kogan Mobile revenue rose 23.8% to $3.5 million, and Kogan Marketplace revenue rose by 104% to $5.1 million.

Despite today’s rebound in the Kogan share price, it is still down by almost 60% from its high. 

More reading

• Province Resources and Zip were among the most traded ASX shares last week
• Could the Resmed (ASX:RMD) share price face a similar selloff to Kogan?
• This broker thinks you should buy the Kogan (ASX:KGN) share price dip
• Leading brokers name 3 ASX shares to buy today
• 2 ASX shares that could be dividend stars of the future

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 Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Kogan (ASX:KGN) share price higher following ASX query appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3ubfO69

The Premier Investments Limited (ASX: PMV) share price is on the move on Wednesday morning.

At the time of writing, the retail conglomerate’s shares are up 1% to $26.09.

Why is the Premier Investments share price on the move?

This morning Premier Investments announced the appointment of the new Chief Executive Officer (CEO) of its core Premier Retail business.

According to the release, the company has poached Richard Murray from rival retailer JB Hi-Fi Limited (ASX: JBH) on a $2 million a year salary.

Mr Murray is currently Group CEO of JB Hi-Fi and has over 25 years’ experience in retail and finance.

He joined JB Hi-Fi as Chief Financial Officer in 2003 and took the business through the IPO process. After which, he was appointed to the Board in June 2012 and became CEO in 2014.

Mr Murray will be replacing Mark McInnes, who announced his exit from the role in January after 10 years at the helm.

Mr McInnes will commence gardening leave following the completion of the 2021 full year trading period. Under the terms of his employment contract, Premier has elected to exercise a 12-month restraint ending in January 2023 and is entitled to exercise a further 12-month restraint through to January 2024.

“A new chapter”

Premier Investments’ Chairman, Mr Solomon Lew, said: “On behalf of the Board, I am delighted to announce Richard’s appointment to the role of CEO Premier Retail. Richard is unquestionably one of the best retailers in Australia, having delivered significant growth, transformation and shareholder value during his career at the JB Hi-Fi Group. Richard’s appointment continues Premier’s track record of recruiting and retaining the best executives in the industry.”

“The appointment of Richard, announced today, will enable the Board and senior leadership team to plan for a smooth and seamless transition. The Board is immensely proud of its highly skilled senior leadership team who remain fully focussed on continuing to deliver for all stakeholders. We look forward to welcoming Richard to our strong and committed team of more than 9,000 people.”

“This is the beginning of a new chapter for Premier as the Group continues to grow its brands both locally and globally while carefully managing through continued pandemic conditions across numerous jurisdictions. With a very strong balance sheet Premier is exceptionally well placed to continue to grow our existing businesses and seek out new opportunities into the future,” he concluded.

More reading

• 2 top ASX dividend shares to buy
• 3 ASX dividend shares to buy today
• Bullish ASX 200 shares breaking into 52-week highs 
• These were the best performing ASX 200 shares in March

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Premier Investments (ASX:PMV) share price higher on CEO appointment appeared first on The Motley Fool Australia.

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

In morning trade, the Airtasker Ltd (ASX: ART) share price is charging notably higher.

At the time of writing, the local services online marketplace provider’s shares are up a sizeable 12% to $1.43.

Why is the Airtasker share price climbing higher?

Investors have been bidding the Airtasker share price higher today following the release of its third quarter update.

According to the release, the company’s performance was ahead of expectations and prospectus assumptions during the third quarter.

As a result, management is confident that it will exceed its prospectus forecasts and has upgraded its FY 2021 gross marketplace volume (GMV) and revenue forecasts accordingly.

Third quarter performance

For the three months ended 31 March, unaudited GMV came in at $41.2 million. This represents 57.9% of the second half FY 2021 prospectus forecast of $71.3 million.

As a result, it has lifted its full year FY 2021 GMV guidance to between $148 million and $152 million from $143.7 million.

In respect to revenue, this increase in GMV led to unaudited quarterly revenue of $7.1 million. As a result, revenue guidance has now been upgraded to between $25.5 million and $26 million from its prospectus forecast of $24.5 million.

This was driven partly by an increase in customers. Airtasker revealed that its cumulative paying customers now exceed 1 million.

Lower costs

Also giving the Airtasker share price a boost today was news that the company’s costs were below forecast during the third quarter. This led to Airtasker generating $2.1 million of positive operating cash flow for the quarter (excluding IPO costs).

Following today’s gain, the Airtasker share price is now up 120% from its IPO listing price of 65 cents.

However, it is still trading some distance from its 52-week high. Investor excitement shortly after its IPO led to the Airtasker share price rocketing as high as $1.97 in March.

More reading

• Could Airbnb’s trademark dispute threaten the Airtasker (ASX:ART) share price?
• 2 ASX shares that this leading fund manager thinks are buys
• Airtasker (ASX:ART) share price continues rollercoaster
• Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy
• 88 Energy and Airtasker were among the most traded ASX shares last week

Motley Fool contributor James Mickleboro 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.

The post Here’s why the Airtasker (ASX:ART) share price is shooting 12% higher appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/330G07b

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.

Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) crushed Wall Street’s estimates with Tuesday’s first-quarter earnings report, driving stock prices to fresh all-time highs.

First-quarter revenue rose 34% year over year, landing at $55.3 billion. Earnings jumped from $9.87 to $26.29 per diluted share. Your average analyst would have settled for earnings near $15.88 per share on top-line sales of roughly $51.7 billion. The targets themselves have been moving up recently. Consensus earnings estimates for this period sat at $13.84 per share three months ago, before 11 analyst firms boosted their projected earnings.

Behind the headline numbers

Some of the bottom-line gains came from an accounting adjustment. Alphabet extended the useful lives of its server hardware from three to four years while stretching the useful life of some networking equipment from three to five years. These adjustments increased diluted earnings by $0.95 per share.

The rest of the positive surprises rested on strong business results. First-quarter sales surged at least 33% higher in each of Alphabet’s four geographic regions, led by a 44% gain in the Asia-Pacific region. YouTube ad sales rose 49% to $6.0 billion and Google Search revenues increased by 30% to $31.9 billion. But in general, Google search has simply become even more popular during the pandemic.

“People have turned to Google Search more than ever since the pandemic began,” CEO Sundar Pichai said on the earnings call. “We see hundreds of millions of searches every day for COVID and related health information. People are also searching for jobs. To help them, job seekers can now use search to quickly and easily find roles that do not require a college degree. We are working together with top employment websites to make this service even better.”

Both Class A and Class C shares of Alphabet traded 4.6% higher at 5 p.m., EDT. At these prices, the pair of FAANG stocks have gained approximately 88% in 52 weeks.

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

More reading

• Better buy: Microsoft vs. Alphabet
• Coinbase IPO: What is a Class A share?
• Tesla and Palantir were some of the most popular US shares last week
• Love tech shares? This ASX ETF is a great buy today
• This ASX ETF is smashing the ASX 200… and the S&P 500

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Alphabet topped Wall Street’s earnings targets by 66% appeared first on The Motley Fool Australia.

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

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

The Suncorp Group Limited (ASX: SUN) share price is on watch this morning after the company shared news it is selling its superannuation products. Suncorp Portfolio Services Limited, the company’s superannuation portfolio, will soon have a new home with LGIAsuper.

The Suncorp share price was swapping hands for $10.41 apiece at yesterday’s close.

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

Suncorp super sale

According to Suncorp’s release, the sale of Suncorp Portfolio Services Limited was proposed in the company’s recent strategic review.

Suncorp says the sale will simplify the company’s portfolio and expects it will have little impact on its profits.

LGIAsuper will pay an estimated $45 million for Suncorp’s super assets. That figure includes a fixed amount of $26.6 million, plus regulatory capital.

LGIAsuper is soon to merge with Energy Super. After the merger and the sale of Suncorp’s wealth business, the two Queensland-based businesses will have approximately $28 billion of super under administration and around 250,000 members.

The sale is expected to be completed in the 2022 financial year.

Suncorp’s CEO Steve Johnston said the sale of Suncorp’s wealth business was a good outcome for Suncorp’s 137,000 superannuation members. The company currently manages $6.4 billion of its members’ super. It was awarded the best performing balanced super investment fund for 2020.

As part of the sale agreement, Suncorp will continue to offer superannuation products to customers for 18 months after the assets are handed to LGIAsuper.

LGIAsuper will offer jobs to approximately 130 employees who are currently working directly or indirectly with the wealth business.

Suncorp expects to be saddled with around $14 million of annualised stranded costs from the sale until the end of the 2023 financial year. It expects this to be offset by traditional services fees.

Commentary from management 

Johnston stated that his goal as CEO was to improve the way Suncorp delivered insurance and banking to its customers.

This approach is already delivering results, and the wealth sale will allow the bank team to focus exclusively on the priorities we outlined at the interim result in February.

Suncorp Banking & Wealth CEO Clive van Horen added:

After extensive engagement with a number of potential acquirers, we believe that LGIAsuper is best placed to deliver sustainable member outcomes.

The values and purpose of LGIAsuper, which is also headquartered in Queensland, align closely with those of Suncorp.

Suncorp share price snapshot

Today’s news puts the Suncorp share price front and centre as investors eye the reaction. Currently, Suncorp shares are up 5% year to date and have lifted 17% over the last 12 months.

The company has a market capitalisation of around $13.3 billion, with 1.2 billion shares outstanding.

More reading

• History is on the side of the battered AMP (ASX:AMP) share price as it plans its demerger
• Why the Suncorp (ASX:SUN) share price is on watch
• Credit Clear (ASX:CCR) share price jumps 10% on Q3 update and Suncorp contract win
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 finishes quarter strongly, Zip partners with JB Hi-Fi, Suncorp gives flood update

Motley Fool contributor Brooke Cooper 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.

The post Suncorp (ASX:SUN) share price on watch after news its ditching super appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2R83C7a

The AnteoTech Ltd (ASX: ADO) share price will be one to watch when it returns to the ASX boards. It comes after a capital raising and trading update from the Aussie biotech company prior to the market open.

Why is the AnteoTech share price on watch?

AnteoTech shares haven’t traded since closing at 42 cents per share last Friday. The company requested a trading halt pending a capital raising update which has been provided early on Wednesday morning.

AnteoTech reported firm commitments to raise $12 million by issuing 46.2 million new fully paid ordinary shares at 26 cents per share. That represents a 20.3% discount to the 10-day volume-weighted average price (VWAP). 

Funds from the placement will be used to scale up the rollout of its proprietary EuGeni reader and COVID-19 in vitro Antigen Rapid Test test (COVID-19 ART). The new capital will also help accelerate the pipeline of other assay tests and for working capital purposes.

The update is sure to have investors watching the AnteoTech share price in early trade. It comes as AnteoTech looks to accelerate its COVID-19 Saliva and COVID-19 Flu A/B test for commercialisation in late 2021. The company is targeting clinical trials in late 2021 for its early-stage sepsis detection test.

AnteoTech CEO Derek Thomson said:

AnteoTech now has the necessary financial flexibility to scale up operations and accelerate the rollout of its EuGeni reader platform and COVID-19 ART test, as well as our growing pipeline of other assay tests which will provide us with a considerable competitive advantage in the current market.

The company is also launching a Share Purchase Plan (SPP) to raise more capital to fund development and growth. The company is looking to raise an additional $4 million from eligible, existing shareholders at that same AnteoTech share price of 26 cents.

Foolish takeaway

AnteoTech closed on Friday at $0.42 per share with a $777.7 million market capitalisation. That means the AnteoTech share price will be one to watch as it returns to trading for the first time this week following the update.

More reading

• ASX stock of the day: AnteoTech (ASX:ADO) shares top ASX
• Why Anteotech, Credit Clear, Galaxy, & Mach7 shares are storming higher
• The Anteotech (ASX:ADO) share price is surging. Here’s why.
• AnteoTech (ASX:ADO) share price rockets 9% on major project news
• Why Anteotech, EROAD, Jindalee Resources, & Kogan are pushing higher

Motley Fool contributor Ken Hall 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.

The post The AnteoTech (ASX:ADO) share price is on watch. Here’s why. appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/32VRJnQ

ASX iron ore miners are poised to outperform the market this morning after the price of the commodity hit a record high.

The steel-making ingredient jumped to US$193.85 a tonne in overnight trade on the S&P Global Platts index, reported the Australian Financial Review.

That’s US85 cents above the previous record set on 15 February 2011.

Big ASX mining shares set to outperform

The S&P/ASX 200 Index (Index:^AXJO) is expected to open with a 0.3% gain but ASX iron ore miners could outperform.

The spotlight is on the Fortescue Metals Group Limited (ASX: FMG) share price, BHP Group Ltd (ASX: BHP) share price and Rio Tinto Limited (ASX: RIO) share price this morning.

Iron ore can set new record highs

This is particularly because experts believe there is more room for the commodity to rally even after its spectacular run.

“The red dirt has seen its price more than double over the past 12 months from $US83.40 a tonne on April 27, 2020,” the AFR quoted S&P Global Platts as saying.

“And as the world turns to infrastructure to stimulate its post-COVID-19 recovery, and as other industrial metals show comparable rises, it could indeed be reasonable to ask how much further this rally could go.”

Why the “supercycle” is more enduring this time

The wave of infrastructure stimulus is a key difference between this iron ore rally compared to the last one in 2011.

Back then, China was the single driving force behind the surging iron ore price. This time, the bull run could be more enduring as is coming from other major economies, including China.

Another reason why experts believe the iron ore price has not peaked is because of high steel prices. Steel mills, the consumers of iron ore, have reported bumper profits in the first quarter.

Make hay while the sun shines

The record price for iron ore is unlikely to dampen demand when steel producers are rushing to make hay while the sun shines.

But there are two potential headwinds facing our iron ore producers. The first is growing calls for the Chinese government to step in to restrict speculators. Steel mills are blaming these short-term traders from driving the iron ore price above fundamentals.

The other is expectations by some that the profit boom for steel mills is starting to slow. If their profit margins come under pressure, this will likely drag on the iron ore price too.

For now at least, the iron ore bulls are firmly in control.

More reading

• 2 fantastic blue chip ASX 200 shares for your portfolio
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 falls, BHP rises, Afterpay sinks
• Up 12% in April – what’s driving the Rio Tinto (ASX:RIO) share price?
• 2 high-quality ASX 200 shares to buy today

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited, Fortescue Metals Group Limited and Rio Tinto Ltd. 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.

The post Record high iron ore price puts these ASX shares in the spotlight this morning appeared first on The Motley Fool Australia.

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

The AFT Pharmaceuticals Ltd (ASX: AFP) share price is one to watch this morning.

Shares in the Kiwi-Australian pharmaceuticals group could be on the move after the company announced a new licensing agreement in the United States.

Why is the AFT Pharmaceuticals share price in focus?

This morning, the company announced the signing of an exclusive license and distribution agreement with Hikma Pharmaceuticals USA (“Hikma”). The new deal is to commercialise Maxigesic IV in the United States with the major pharmaceuticals supplier.

Maxigesic IV is an intravenous, opioid free, postoperative pain relief medicine developed by AFT. Today’s agreement represents the first out-license of the Maxigesic family of medicines in the US market.

That’s an important milestone for the company and the AFT Pharmaceuticals share price is one to watch as a result. In today’s release, AFT also said it was targeting the US market for the tablet and liquid forms of the medication in the longer term.

What are the terms?

Under the terms of the agreement, Hikma will have exclusive rights for the sales, marketing and distribution of Maxigesic IV in the US. AFT will receive upfront, regulatory and commercial milestone payments of up to US$18.8 million in return.

The milestone payments comprise US$7.5 million based on triggers leading up to and including registration and first commercial sale of the product. US$3.6 million of those will be earned once Food and Drug Administration (FDA) approval is received. The trans-Tasman pharma group will also receive a profit share from in market product sales.

That’s potentially big news which puts the AFT Pharmaceuticals share price on watch this morning. Shares in the pharma group are down 28.0% in 2021 with a market capitalisation of $381.6 million prior to the open.

Foolish takeaway

Hikma is the third largest US supplier of generic injectable medicines by volume. AFT also said it is working to complete FDA approval for the tablet form of the medication.

Investors will be watching the AFT Pharmaceuticals share price ahead of its audited financial results in May.

More reading

• Record high iron ore price puts these ASX shares in the spotlight this morning
• Here’s why the JB Hi-Fi (ASX:JBH) share price will be in the spotlight today
• Why Facebook is still great value
• Coles (ASX:COL) share price in focus after Q3 sales update
• This fundie has a PhD in healthcare: now she invests in it

Motley Fool contributor Ken Hall 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.

The post Why the AFT Pharmaceuticals (ASX:AFP) share price is in focus appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3dUot7c

The JB Hi-Fi Limited (ASX: JBH) share price will be in the spotlight this morning. This comes after the company announced its new group CEO.

It will also be interesting to see where the Australian electronics retailer’s shares move, after finishing yesterday’s market close at $47.52.

New CEO appointment

According to this morning’s release, JB Hi-Fi advised it has appointed Mr. Terry Smart to become its new group CEO. The announcement follows current group CEO Mr. Richard Murray’s decision to depart from the company to take on new challenges.

Mr. Smart will transition smoothly into the role after serving as group CEO of JB Hi-Fi between May 2010 to June 2014. Before that, Mr. Smart held the position of chief operating officer for 10 years, overseeing the company’s significant expansion.

From April 2017 and onwards, Mr. Smart has held the position of managing director of The Good Guys. He notably took lead on the company’s repositioning efforts and improvement in business performance over the last few years.

Mr. Smart will join the JB Hi-Fi board as an executive director in the near future. The group’s chief financial officer (CFO), Mr. Nick Wells, will also join the board at the same time. Mr. Wells has been in the role of CFO since 2014.

JB Hi-Fi revealed that Mr. Smart’s successor as managing director of The Good Guys will be named in due course.

Mr. Smart will take over the reins as the new group CEO at the end of August 2021.

Management commentary

JB Hi-Fi chair, Stephen Goddard acknowledged Mr. Smart’s extensive experience, saying:

Terry’s appointment demonstrates the quality and depth of our management team. Terry has a proven record as one of Australia’s leading retail executives, both as CEO of the JB Hi-Fi business and more recently as managing director of The Good Guys. We look forward to him applying his considerable talents to both of the Group’s brands.

Incoming group CEO, Mr. Smart went on to add:

I am excited to take on the role of Group CEO. In JB Hi-Fi and The Good Guys we have two of Australia’s most loved, respected and successful retail brands. Both businesses continue to be well positioned to maximise the opportunities ahead of them and I look forward to working with the two best retail management teams in the business.

JB Hi-Fi share price snapshot

The JB Hi-Fi share price has risen close to 40% over the past year but predominately moved in circles since August 2020. The company’s shares reached an all-time high of $55.25 earlier this year, before treading lower.

JB Hi-Fi has a market capitalisation of roughly $5.45 billion, with just 114.8 million shares on issue.

More reading

• Latitude (ASX:LFS) makes a splash on its ASX debut
• Aussie dollar shoots higher! Here are some ASX winners
• Why is the Spacetalk (ASX:SPA) share price jumping 6% today?
• These are the 10 most shorted shares on the ASX
• 2 ASX dividend shares with large yields and consistent payouts

Motley Fool contributor Aaron Teboneras 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.

The post Here’s why the JB Hi-Fi (ASX:JBH) share price will be in the spotlight today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3xoi9fX

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.

Social media companies were big beneficiaries of the COVID-19 pandemic. Naturally, having consumers confined to their homes meant more time spent in front of screens. This really showed up in the numbers, with most companies in the sector experiencing a spike in monthly active users on their platforms. Facebook (NASDAQ: FB) converted this tailwind into a huge earnings boost, but not simply because it had strong increases in users or even revenue. The company also managed its growth in costs really well, putting its operational wherewithal on full display. It could draw some key lessons from this period, and run a slightly leaner business to supercharge its bottom line. 

The business of social media 

Facebook is the standout among social media technology companies, which have typically struggled to generate profits. Year after year, the company attracts steady user growth and turns those newcomers into revenue, thanks in part to fantastic acquisitions like Instagram and WhatsApp. 

The company delivered 57% full-year 2020 earnings growth, beating consensus analyst expectations by about 22%. Now, analysts on average are expecting earnings to grow by over 30% in the next two years. 

Metric	Full-Year 2020	Full-Year 2021	Full-Year 2022
Consensus earnings per share estimate	$8.27	$11.33	$13.54
Actual earnings per share	$10.01	N/A	N/A

Data source: Yahoo! Finance. 

While Facebook had solid 2020 revenue growth of 21%, its meager 14% growth in operating expenses really stood out. For context, the average annual growth in operating expenses from 2017 to 2019 was 51% — making this a significant achievement for the company’s profitability. The company did deduct $6.2 billion in previous charges from legal fights with the U.S. Federal Trade Commission and BIPA class action, but adding those costs back in brings total expense growth to 27% — still a large reduction over previous years. 

Sales and marketing costs contributed to this story, growing just 17% from the previous year. This expense grew 66% and 25%, respectively, in 2018 and 2019. It remains to be seen whether 2021 will see a further slowdown in this metric once the effects of the pandemic are over and normal life resumes. The company may have to invest more marketing dollars to encourage engagement. 

Facebook also kept headcount growth (new staff) fairly steady at 30%, whereas the average of the two previous years was 34%. 

Overall, if the company can continue tapering further expansions in costs and keep them below trend, it could unlock enormous value at the bottom line. 

Reliable growth

Despite hosting over a third of the entire planet in its social media ecosystem, the company still manages to add hundreds of millions of new users each year.

Year	Monthly Active Users	Growth
2017	2.13 billion	N/A
2018	2.32 billion	8.9%
2019	2.50 billion	7.8%
2020	2.80 billion	12%

Data source: Company filings. 

More impressively, revenue per monthly active user has grown over 60% in the last four years, providing Facebook with the flexibility to invest heavily in growth while still remaining profitable. 

Year	Revenue Per Monthly Active User	Growth
2017	$19.08	N/A
2018	$24.05	26%
2019	$27.86	16%
2020	$30.01	7.7%

Data source: Author’s calculations based on public filings. 

There are signs of growth deceleration in revenue per monthly active user — it’s hard to scale any business exponentially, or forever — which could be a sign the business is maturing from its volatile growth phase. Facebook might be on track to separate further from its counterparts in the sector, by continuing to operate as a reliable source of steady earnings. 

Value, with some external risk

Based on its April 22 closing price of $296.52, Facebook trades at 26 times estimated 2021 earnings, and 21.8 times estimated 2022 earnings. If the company continues on its current trajectory of revenue and expense growth, there is a possibility it will outperform current expectations. However, the stock still represents value now, trading at 30 times 2020 earnings compared to the S&P 500‘s near 40 times. 

There is a cloud of uncertainty surrounding the impact of Apple‘s new iOS 14.5 update, which will require companies like Facebook to get consent from the users it wants to track. It could mean hundreds of millions of users opting out of letting Facebook follow them around the internet, which will impact advertisers’ ability to target them. The company says it’s well positioned to handle this, with new features like Facebook Shops and Instagram Shops generating significant traction already — basically giving brands the power to sell directly to consumers through the actual social media platforms. 

Investors should watch this closely. If Facebook can deflect any negative impacts of these external changes, it could be set for further growth at the bottom line. 

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

More reading

• Isn the right time to buy Spotify?
• Love tech shares? This ASX ETF is a great buy today
• This ASX ETF is smashing the ASX 200… and the S&P 500
• Why Facebook stock gained 14% last month
• Afterpay (ASX:APT) leads Zip by 40% on one critical measure

Anthony Di Pizio has no position in any of the stocks mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Facebook and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple. The Motley Fool Australia has recommended Apple and Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Facebook is still great value appeared first on The Motley Fool Australia.

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

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