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The Codan Limited (ASX: CDA) share price is surging higher after the company announced a robust trading performance for the first 4 months of the 2021 financial year.

At the time of writing, the Codan share price is up 4.9% to $10.05. The S&P/ASX 200 Index (ASX: XJO) is also having a strong day today, currently up 1.3% at 6,718 points.

Codan designs and manufactures a range of electronic products and software to governments, businesses, aid and humanitarians, and customer markets. The company’s 3 main products are radio communication, metal detection, and tracking solutions.

What’s driving the Codan share price higher?

In today’s release, Codan advised that demand has been strong for its metal detectors, in both recreational and mining markets .

Management noted that an array of internal changes led to the company achieving growth. This included the expansion into new geographical areas, increased distribution into retail channels, and investment in its manufacturing capacity.

Codan said the positive result has offset its tactical communications business which is significantly down this year.

In light of this, the board expects a net profit after tax of $40 million for the first-half of the 2021 financial year.

While it stopped short of making second-half projections, the group believes a stronger period awaits. This comes as the company is gearing up to launch its new packed detector in the third quarter of FY21.

In addition, the company has an order book of more than $30 million in its communications business due in the second half of FY21.

Codan share price summary

The Codan share price has been a solid performer over the past 5 years, reflecting gains of more than 1,300%. Patient shareholders who kept hold for that period would have effectively turned every $1,000 invested into $13,000. Indeed, Codan has comfortably blown away the S&P/ASX 200 Index, which has a 31% return over the same timeframe.

Codan has a market capitalisation of $1.8 billion and a price-to-earnings (P/E) ratio of 28.6.

More reading

• ASX 200 up 1.1%: ANZ AGM, Resolute jumps, travel shares soar
• The Commonwealth Bank (ASX:CBA) share price is climbing higher today. Here’s why.
• The ASX bank with the best dividend yield under APRA’s new guidelines
• Why the Beacon Lighting (ASX:BLX) share price is on watch today
• Here’s how ASX 200 bank shares have performed in 2020 so far

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.

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

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Altium Limited (ASX: ALU)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $40.00 price target on this electronic design software provider’s shares. The broker was pleased to see that Altium recently reaffirmed its FY 2021 guidance despite the tough operating environment. In addition to this, Morgan Stanley notes that management spoke positively about its new Altium 365 platform. This is a big positive as the cloud-based platform is expected to be a key driver of its growth in the future. The Altium share price is trading at $33.92 this afternoon.

BHP Group Ltd (ASX: BHP)

Analysts at Ord Minnett have retained their buy rating and $50.00 price target on this mining giant’s shares. The broker has lifted its forecasts for a number of commodities notably higher, which it feels bodes well for BHP in 2021. So much so, the broker is forecasting a fully franked ~$2.39 dividend in FY 2021. Based on the current BHP share price of $42.78, this represents a 5.6% dividend yield. Combined with its price target, BHP’s shares offer a potential return in excess of 22% over the next 12 months.

Challenger Ltd (ASX: CGF)

A note out of UBS reveals that its analysts have reinstated coverage on this annuities company’s shares with a buy rating and improved price target of $6.85. Although the Challenger share price has recovered well after being hammered at the height of the pandemic, the broker still sees meaningful upside. It also believes the risks are now to the upside in respect to Challenger’s earnings, especially given favourable regulatory developments. The Challenger share price is trading at $5.93 on Wednesday.

More reading

• Brokers warning high iron ore prices are unsustainable
• Will China’s trade war torpedo the Rio, Fortescue and BHP share prices?
• ASX 200 down 0.1%: APRA removes bank dividend restrictions, Fortescue slides, Zip higher
• Why Althea, Altium, Fortescue, & Retail Food Group are dropping lower
• Is the Altium (ASX:ALU) share price in the buy zone?

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

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Facebook Inc (NASDAQ: FB) faces legal action in the Australian Federal Court, accused of “false, misleading or deceptive conduct”.

The Australian Competition and Consumer Commission (ACCC) announced on Wednesday it has started proceedings against the US company and two subsidiaries.

The allegations involve the promotion of Facebook’s ‘Onavo Protect’ smartphone app.

The consumer watchdog accuses the social media giant of spruiking the app as a way to protect private data – when in reality it was harvesting data for commercial purposes.

“Facebook was collecting and using the very detailed and valuable personal activity data of thousands of Australian consumers for its own commercial purposes, which we believe is completely contrary to the promise of protection, secrecy and privacy that was central to Facebook’s promotion of this app,” said ACCC chair Rod Sims.

Onavo Protect was promoted as a virtual private network (VPN) tool, which is commonly used by individuals and workplaces to encrypt and anonymise internet activities.

The app’s marketing used phrases like “save, measure and protect” and the slogan “Keep it secret. Keep it safe”.

“Consumers often use VPN services because they care about their online privacy, and that is what this Facebook product claimed to offer,” Sims said.

“In fact, Onavo Protect channelled significant volumes of their personal activity data straight back to Facebook.”

ACCC is seeking orders and penalties from the court.

Facebook says it was ‘always clear’

A Facebook spokesperson told The Motley Fool that the company has co-operated with ACCC’s investigation “to date”.

“When people downloaded Onavo Protect, we were always clear about the information we collect and how it is used,” said the spokesperson.

“We will review the recent filing by the ACCC and will continue to defend our position in response to this recent filing.”

It is understood Apple Inc (NASDAQ: AAPL) deleted the Onavo Protect from its app store in 2018 for not complying with terms and conditions. The violations included harvesting data about other apps on the device to perform analytics.

The Australian court case adds to Facebook’s already substantial legal woes. 

The US Federal Trade Commission earlier this month started court action alleging the company is maintaining an “illegal” monopoly.

That court filing accuses Facebook of using data collected from Onavo Protect to identify potential future acquisitions.

More reading

• With the high Aussie dollar, is now a good time to buy US shares?
• Here are the US shares ASX investors are buying
• Zip (ASX:Z1P) share price pushes higher on Facebook deal
• Facebook allegedly crossed a line in buying up the competition
• Apple stock could surge 61% to $200, according to this analyst

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. Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Facebook. 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.

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Analysts at UBS Bank say that breaking up AMP Ltd (ASX: AMP) into separate businesses will not generate any increased value for shareholders.

This comes after AMP advised it was undergoing a portfolio review, following a takeover bid by American company Ares Management in November.

The AMP share price is currently trading at $1.735, which is below Ares’ offer price of $1.85.

What did the analysts at UBS say?

Broker UBS said breaking up the financial services company was a bad idea and would not generate increased shareholder value. UBS analysts, in their presentation to clients this morning, said that “stranded costs and capital dissynergies will likely dilute any higher value asset sales”. 

Regarding AMP’s portfolio review, the broker said “the sum-of-the-parts valuation for many financial services companies is worth less than the sum of the whole, as demonstrated in recent transactions across financial services, with significant separation costs and capital dis-synergies often underestimated”.

The broker gave the example of the $3 billion sale of AMP Life to Resolution Life back in July. According to the analysts, that sale was years in the making before it was finally agreed, but “disappointed when it came to capital releases and capital management”.

What’s been happening at AMP?

AMP has experienced a difficult 2020, which included a sexual harrassment lawsuit brought by a former employee. That lawsuit ended in a parliamentary inquiry with chief executive Francesco De Ferrari appearing for questioning in September, and insisting there was no systemic cultural problem at AMP.

AMP’s reputation as one of Australia’s oldest and most trusted wealth managers also took a potentially fatal hit during the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. 

The subsequent appointment of Mr De Ferrari shortly after the conclusion of that commission was supposed to herald a turnaround for the company. 

However, AMP seemed to raise the white flag earlier this year when it declared all parts of its business open for a possible sale. 

This has atttracted multiple potential buyers, with Ares Management making the first move in November by offering a cash and scrip offer of $1.85.

About the AMP share price 

The AMP share price started the year at $1.92, before plunging to $1.08 in March – its 52-week low.

The share price jumped and has since supported itself at the current level when the Ares’ offer was announced.

The company commands a market cap of $5.96 billion.

More reading

• How to protect your super fund when you’re approaching retirement
• What can ASX investors expect in 2021? AMP Capital’s top thinkers offer their insights
• The sector that’ll explode in February: fundie
• Macquarie (ASX:MQG) share price lags on $2.3bn takeover
• IOOF (ASX:IFL) share price lifts after investor briefing

Motley Fool contributor Eddy Sunarto 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.

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Ellume, a small Brisbane-based private biotech company, is in the news today. And for good reason – Ellume has just received an endorsement from the all-powerful United States Food and Drug Administration (FDA).

According to reporting in The Australian today, Ellume has been working on rapid diagnostic technology over the past 10 years and has developed a test for COVID-19 infection. This test, which costs around US$30 and can reportedly detect traces of coronavirus within 20 minutes, is apparently bound for America. The test has a 94% “sensitivity” for detecting the virus. It is also 96% effective for identifying negative cases. Those statistics are according to clinical trials of the test.

The Australian reports that, following endorsement from the FDA, Ellume is about to send “more than 100,000 of its tests” to the United States, beginning “at the start of next month”. Ellume plans on delivering more than 5 million tests each month to the United States by March next year.

Ellume in FDA spotlight

The FDA is often touted as one of the strictest pharmaceutical regulators in the word. It has called Ellume’s test a “major milestone in diagnostic testing for COVID-19”.

The report quotes FDA commissioner Dr. Stephen M. Hahn on Ellume’s approval:

By authorising a test for over-the-counter use, the FDA allows it to be sold in places like drug stores… A patient can buy it, swab their nose, run the test and find the results in as little as 20 minutes…

As we continue to authorise additional [Ellume] tests for home use, we are helping expand Americans’ access to testing, reducing the burden on laboratories and test supplies, and giving Americans more testing options from the comfort of their own home.

The US government has reportedly “injected” US$40 million into Ellume to assist with this process and accelerate production of the testing kits. According to Ellume chief executive Dr. Sean Parsons, this money is going towards adding “50 people a week to [Ellume’s] 250-person workforce”.

Dr. Parsons also told The Australian the company expects this development to “generate an expected 20-fold increase in revenue for Ellume”.

Even though the US Government has given Ellume the green light, there are no signs that our Australian Government will follow suit. As such, it seems we will have to wait a lot longer than the Americans for access to this technology.

This positive development for Ellume could also explain why some ASX biotech shares, such as Memphasys Ltd (ASX: MEM), are performing well today. It’s certainly a good news story for a small Aussie company.

More reading

• 3 key takeaways from the ANZ annual general meeting
• 3 things you’ll want to know when Nike announces earnings
• Why Mesoblast, Pilbara Minerals, Pushpay, & Retail Food Group shares are dropping lower
• Brokers warning high iron ore prices are unsustainable
• Service Stream (ASX:SSM) share price falls despite NBN agreement

Motley Fool contributor Sebastian Bowen 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.

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The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price has been a positive performer on the day of its annual general meeting.

In afternoon trade the banking giant’s shares are up 2% to $23.41.

This latest gain means the ANZ share price is now up an impressive 35% since the start of October.

What happened at the annual general meeting?

At the event, ANZ’s Chairman and CEO provided investors with a thorough breakdown of the company’s performance over the last 12 months and their expectations for the future.

Three key takeaways from the event are as follows:

2020 has been a difficult year.

There’s no getting away from the fact that 2020 has been a difficult year for the bank because of the COVID-19 pandemic.

Speaking about its results in FY 2020, CEO Shayne Elliott commented: “It was of course COVID that had the most material impact on our profitability. With operating profit before these provisions broadly flat, the largest driver of the profit reduction was setting aside a further $1.7bn for possible future losses.”

ANZ’s underlying performance has been positive.

With COVID provisions dominating the bank’s results, it actually overshadowed a positive underlying performance by ANZ this year.

Mr Elliott explained: “…our diversified business delivered a decent revenue performance. In Australia, we achieved six-months of consecutive market share growth in our targeted owner-occupier market, while deposit growth remained very strong. We also introduced new processes to help customers move to online banking.”

“The work we have spoken about for several years to simplify and refocus the Institutional business proved massively beneficial. In fact, our institutional bank outperformed and I’m proud of its transformation. It demonstrates the value of a well-balanced, diversified portfolio in a market defined by high levels of liquidity, low interest rates and geopolitical tensions.” He added.

COVID-19 has changed things for the better.

The CEO also spoke about the future and advised that he is looking at COVID-19 differently.

He said: “There is another way of thinking about a crisis – it is of course just a period of rapid change. In fact, many of the great companies we think of today, companies like Microsoft, Apple, and Amazon forged their success in periods of great dislocation. This is because people in a time of crisis have new needs and good companies figure out how to provide for them.”

“And this is where my focus and the focus of my team is. We stand ready to take advantage of the opportunities that will arise. We are supporting our best customers and will emerge with stronger relationships than we started. We will continue to reshape our portfolio to produce a more balanced, lower risk business that generates decent, more predictable returns. We are going to continue to make the bank simpler and easier to manage,” he added.

Mr Elliott pointed to its recent partnership with global payments leader Worldline as a great example of this.

He notes that this partnership will provide its “small business customers with access to the world’s best technology, allow them to get paid, quickly, safely and at low cost.”

More reading

• ASX 200 up 1.1%: ANZ AGM, Resolute jumps, travel shares soar
• The Commonwealth Bank (ASX:CBA) share price is climbing higher today. Here’s why.
• Here’s how ASX 200 bank shares have performed in 2020 so far
• Why ASX banks are licking their lips right now
• 5 things to watch on the ASX 200 on Wednesday

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.

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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.

Nike Inc‘s (NYSE: NKE) sales are bouncing back after initially falling at the coronavirus pandemic’s onset. Nike was able to shift its focus to digital sales quickly, and that’s proving to be the difference-maker.

Clearly, the company faces difficulties at its own and its partners’ brick-and-mortar stores, but it’s hoping that digital growth will more than offset those declines. Indeed, the company has put itself within striking distance of reporting a revenue increase for the second quarter of fiscal 2021. Nike is set to report its results for the quarter on 18 December. 

Meanwhile, positive developments on coronavirus vaccines mean that the athletic apparel company’s operations can potentially return to normal in the back half of 2021. Here are three important metrics investors should look at in this week’s earnings report.

Nike is rebounding

The first thing investors will want to look at is Nike’s overall revenue, which declined by 1% in the company’s fiscal first quarter. It will certainly help that nearly all of its stores are open again. However, with coronavirus cases surging worldwide, it’s unclear what appetite consumers have for shopping in person. Fortunately, Nike has a robust digital channel to help shoppers who would like to buy its products from the safety of their homes.

The second thing shareholders will be interested in is Nike’s share buyback program. The company suspended share repurchases in March, in part to conserve cash in an uncertain environment. Nike might announce in this week’s earnings report that it will resume buying back its own shares.

It recently increased its dividend by 12%, signaling its commitment to return capital to shareholders. If Nike reinstates its buyback program, it would show investors that management feels confident in the company’s prospects and believes the stock is undervalued.

Lastly, investors will want to look for what management has to say about holiday sales progress thus far. This holiday season is unlike any in recent history, and so it will be important to hear if the seasonal increase in consumer spending is flowing through to Nike. Interestingly, the company ended August with inventory up 15% from a year earlier. If the demand is there from customers, Nike has plenty of inventory to sell.

What this could mean for investors 

On average, Wall Street analysts are forecasting that Nike will report revenue of $10.55 billion and earnings per share (EPS) of $0.61 for the fiscal second quarter. If the company hits those targets, it will be an increase of 2.2% for revenue and a 13% decrease in EPS.

Nike stock has already gained 37% year to date, despite the lack of a robust sales recovery. If the company reports earnings below expectations and talks pessimistically about holiday sales and profit margins, look for the price of this consumer goods stock to pull back after the earnings release.

Still, investors should not be alarmed by short-term movements in the stock price and can treat a price drop as a buying opportunity.

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

More reading

• What COVID-19? World’s 5 most valuable brands are up 54%

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

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In 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 1.2% to 6,709.3 points.

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

Mesoblast limited (ASX: MSB)

The Mesoblast share price was down 2% to $3.77 before being placed into a trading halt. Investors have been selling the biotech company’s shares this week following the release of disappointing trial results. Mesoblast requested the trading halt earlier today pending the release of an announcement relating to a corporate update.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price has crashed 19.5% lower to 70.5 cents. This follows the completion of the institutional component of its equity raising. Pilbara has now raised a total of $180 million from institutional investors at a price of 36 cents per share. This represents a massive 59% discount to its last close price. The equity raising has been undertaken to fund the acquisition of the Altura Pilgangoora Lithium Project in Western Australia.

Pushpay Holdings Ltd (ASX: PPH)

The Pushpay share price has fallen 3.5% to $1.72. This follows the completion of a bookbuild which saw two major shareholders sell down their holdings. According to the release, the 54.68 million shares were sold for NZ$1.79 per share, which was higher than the floor price and a discount of 5.3% to its last close price.

Retail Food Group Limited (ASX: RFG)

The Retail Food Group share price is down a further 3.5% to 8.2 cents. Investors have been selling the food and beverage company’s shares after the ACCC started proceedings in the Federal Court against it and five of its related entities. The corporate watchdog alleges that the company engaged in unconscionable conduct and made false or misleading representations in its dealings with franchisees.

More reading

• Why the Pilbara Minerals (ASX:PLS) share price crashed 17% lower today
• Why the Pushpay (ASX:PPH) share price is tumbling lower today
• 3 exciting ASX tech shares to buy in 2021
• ASX 200 falls on Tuesday
• Retail Food (ASX:RFG) share price sinks 23% this morning. Here’s why.

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

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Most analysts believe the iron ore price is set to tumble from current levels. Should investors in ASX mining stocks be spooked?

While the price of the steel making ingredient has pulled back from its high at around US$160 a tonne, it’s still within striking distance of its record at around US$150 a tonne.

There are several well-known and lesser-known factors that have pushed the commodity higher. Trade war tensions is the most recent event making the headlines, while Brazilian miner Vale SA’s weak production guidance is another.

Speculators adding to the iron ore price frenzy

But that’s only the tip of the iceberg. There’s a range of other factors keeping the iron ore price high and ASX iron ore producers well bid.

“The rate of erosion of China’s port stocks suggests the market is currently in an 80Mtpa deficit, with price $50/t above its ‘normal’ level vs inventory,” said Morgan Stanley.

“Clearly the market is pricing in more tightness to come, with speculative inflows on the Dalian and SGX exchanges driving the price higher.”

Supply side issues a tailwind for industry

The broker also noted that the cyclone season is upon us, which could disrupt supply of the mineral from Australia to China.

Supply is also at risk over the medium-term. The Rio Tinto Limited’s (ASX: RIO) Juukan debacle has also perversely helped to keep the iron ore price higher.

The recommendation in front of government is likely to limit the expansion and development of new mines.

“There are about 35,000 declared Aboriginal heritage sites in Western Australia, with about 5% of all iron ore tenements covered by heritage areas,” added Morgan Stanley.

“Having to avoid these sites altogether will require mine plans to be adjusted, and could sterilise some reserves.”

Seasonal demand helping ASX iron ore miners

Further, the seasonal dip in demand from Chinese steel mills may not happen this year. Blast furnace utilisation is still stuck at above 90% and finished steel inventories are running down.

“Although winter has arrived in Northern China, it looks like construction firms want to make up for earlier delays during the winter months,” said Morgan Stanley.

Despite these tailwinds, the broker warned that iron ore is looking overbought and its forecasting prices will fall to average US$123 a tonne in the first half of 2021.

UBS’ prediction is even more dire. The broker is also warning that fundamentals cannot support the spot price and that the commodity will average US$110 a tonne next year.

Should you sell ASX iron ore stocks now?

However, before you panic sell the mining heavyweights like the Fortescue Metals Group Limited (ASX: FMG) share price and BHP Group Ltd (ASX: BHP) share price, Morgan Stanley can’t see a trigger in the near-term that could send the iron ore price tumbling.

Further, analyst forecasts have notoriously underestimated the iron ore price. This highlights the fact that making forecasts can be more art than science.

And even if the iron ore price were to ease closer towards US$100, our iron ore majors will still be making very good profits, which is more than what we can say for many other sectors.

More reading

• Will China’s trade war torpedo the Rio, Fortescue and BHP share prices?
• ASX 200 down 0.1%: APRA removes bank dividend restrictions, Fortescue slides, Zip higher
• Why Althea, Altium, Fortescue, & Retail Food Group are dropping lower
• Why the Afterpay (ASX:APT) share price is not the only rising star this year
• Leading brokers name 3 ASX shares to buy today

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Service Stream Limited (ASX: SSM) shares are falling lower today despite the company announcing a new, multi-year agreement with NBN Co. At the time of writing, the Service Stream share price is down 2.1% to $2.35.

What did Service Stream announce?

This morning, investors seem ambivalent about the company’s long-term contract, sending the Service Stream share price lower.

According to its release, Service Stream has secured a significant contract with nbn under a unified field operations agreement. The contract will see the company provide service activations, operations and maintenance activities to the national broadband network. This will include working with fibre to the node (FTTN), fibre to the premise (FTTP), fibre to the basement (FTTB), fibre to the curb (FTTC), and hybrid fibre coax (HFC).

Terms of the deal

Under the contract, Service Stream and nbn will work together for a period of 4 years. This can be extended on nbn’s behalf for an additional two 2-year options.

The new deal will take over the existing operations and maintenance master agreement (OMMA) that was in place since December 2015. It is anticipated the swap over will be completed around March 2021.

Furthermore, nbn has permitted Service Stream to operate in regional areas across Queensland, South Australia, Northern Territory, and Western Australia. Service Stream noted that additional regions will be allocated at nbn’s discretion.

In the first year, the contract is estimated to generate roughly $70 million of revenue for Service Stream. For the following years, revenue will depend on actual work volumes carried out.

What did management say?

Service Stream managing director Mr Leigh Mackender commented on the milestone achievement, saying:

As a leading provider of operations and maintenance services to the telecommunications industry, we are pleased to secure another long-term maintenance agreement with nbn and to continue providing vital support to its customers.

Following the recent signing of the Unify Networks agreement in August across a similar term, Service Stream will effectively be providing nbn with operations and maintenance support across all mainland states and territories under either the Unify Networks or Services agreements.

Service Stream share price summary

The Service Stream share price is relatively flat over the past 12 months’ trading, offering shareholders meek returns.

The company’s shares reached a 52-week high of $2.85 in January, before falling to a multi-year low of $1.54 in March.

Based on the current Service Stream share price, the company has a market capitalisation of around $970 million and a price-to-earnings (P/E) ratio of 19.

More reading

• 3 top ASX dividend shares to buy
• 3 leading ASX dividend shares to buy for income
• 3 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 recommended Service Stream Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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