Tag: Motley Fool

The Youfoodz Holdings Limited (ASX: YFZ) ready-to-eat meal brand is expected to list on the ASX in the second week of December. The company’s initial public offering (IPO) is currently underway, with Youfoodz looking to raise $70 million at $1.50 per share.

What does Youfoodz do?

Founded in 2015, the Brisbane-based company makes and sells fresh, pre-prepared meals and healthy snacks and drinks that are delivered to customers’ doors. In addition, the business begun selling grocery essentials and fruit and vegetable boxes for home delivery amid high demand during the COVID-19 pandemic.

Growth goals

In the Youfoodz investment prospectus, chief marketing officer Simon Jarvis highlights the company’s plan to double the size of its business.

Jarvis himself spent 10 years in the agency space before working as a business-to-consumer marketer with Telstra Corporation Ltd (ASX: TLS), TAB New Zealand and TheScore Inc. Youfoodz points to Jarvis’ extensive cross-border marketing experiences as a tool to ensure the company can rapidly drive new customer acquisition, retain existing customers more effectively and maximise returns on marketing investment.

In the prospectus, the company outlined it is focused on executing five key growth initiatives:

• capturing underlying market and category growth
• growing segment market share and Average Order Value through new offerings
• customer retention with a subscription model and loyalty program
• manufacturing automation and other efficiencies from a new purpose-built manufacturing facility
• selectively targeting new geographies.

Youfoodz is also working to understand customer segments through data-driven customer relationship management communications.

In a recent interview, Jarvis highlighted that Youfoodz has an audience profile that skews 70% female and around 25 years of age who are single or live with a partner, adding “[b]ecause our product is about convenience, time saving and healthy meals made easy, it tends to appeal to… people commuting to work with less time to cook and prepare meals.” 

He commented that data shows that 4.9 million of Australia’s 14.8 million main grocery buyers fit into this time-poor category.

Details of the offer

According to Youfoodz management, the IPO proceeds will be used for the following purposes:

• 21% to help fund new manufacturing facilities
• 35% for general corporate purposes
• 36% for repaying shareholder loan to a major shareholder RGT Capital (which provided debt financing of $25 million, pre-IPO).

Youfoodz shares are expected to start trading on 8 December.

More reading

• Why Redbubble, Kogan, Marley Spoon and 1 other ASX share are surging
• Temple & Webster (ASX:TPW) share price barnstorms back with 11% rise

Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Marley Spoon (ASX:MMM) rival set to list on the ASX appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2J0GoMV

The Ainsworth Game Technology Limited (ASX: AGI) share price is down 7.1% at 32.5 cents today, on news the company expects to make a loss of $15 million in the first half of FY21. The slot machine manufacturer projects that depressed market conditions as a result of COVID-19 will continue to impact its business throughout the first half.

A more positive outlook for the second-half

Despite forecasting challenging market conditions for the first half, Ainsworth is optimistic that its business will improve in the second-half. 

The company says that based on the current landscape in North America, it anticipates improved performance as FY21 progresses. This improvement will be built on on the success of its HHR (Historical Horse Racing) products, as well as on its recent acquisition of MTD Gaming. Ainsworth purchased the United States-based MTD Gaming for US$26 million back in March this year. 

In Australia, the company says it sees encouraging initial market response to its new A-Star cabinet slot machine products.

Ainsworth did not release additional details when it announced earlier today that it expected to make a $15 million loss in the first half of FY21 but said this would be a year of two distinct halves. The first half would be about safety and security through the reopening phase. The second half about recuperation and development as the world entered the “new normal” phase.

The company will provide an update on its progress at half year results in February 2021.

How did Ainsworth Game fare in 2020?

Ainsworth’s FY20 results reflected the impacts of COVID-19. For full-year FY20, sales revenue was A$149 million, a decline of 36% compared to FY19. It reported a loss after tax for the year of $43 million. 

The company attributed these disappointing numbers to the suspension of some of its clients from mid-March, as a result of Government-ordered shutdowns of casinos and bars around the world, including in Australia. Since that time, some of its customer’s facilities have reopened. However, venues have reduced capital expenditure made by its customers due to patron numbers being well below pre-pandemic levels. 

The Ainsworth Game share price has lost more than half its value this year. The share price began the year trading at 80 cents, its highest level for the year. The Ainsworth Game share price reached its all-time high in 2017, when it was trading at $2.65. At today’s price of 32.5 cents, the company currently commands a market cap of $110 million. 

More reading

• Here’s why the Ainsworth Game (ASX:AGI) share price gained today

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why has the Ainsworth Game (ASX:AGI) share price dropped 7% today? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2V1Djye

The Pointerra Ltd (ASX: 3DP) share price fell lower today despite announcing a positive annual contact value update. By the market’s close, the Pointerra share price was down 6.48% to 50.5 cents. This compares to the All Ordinaries Index (ASX: XAO) which closed 0.78% lower at 6,641.80 points.

Let’s take a look at what Pointerra does and what it reported today.

What’s driving the Pointerra share price lower?

The Pointerra share price dropped lower today as shareholders digested the company’s latest set of results.

According to the release, Pointerra advised that, during the months of October and November, its annual contract value (ACV) has increased. The company revealed a surge in spending from its existing customers in addition to the onboarding of new customers. Pointerra experienced growth across its Australian and United States markets whereby its ACV run-rate has eclipsed the second quarter of FY21.

For the period from 15 October to 25 November, the company achieved ACV at US$5.82 million. This represents an 18% increase from when ACV was last reported 40 days ago.

The company stated that its software-as-a-service (SaaS) solutions increased ACV by US$0.89 million. This included its data-as-a-service (DaaS), analytics-as-a-service (AaaS), and data-processing-as-a-service (DPaaS) solutions.

Management said that it will update the market on further ACV growth when available. In addition, contract awards within the company’s suite of services will be announced during FY21.

What does Pointerra do?

Based in Australia, Pointerra provides 3D geospatial data technology. Its online platform processes massive 3D dataset and stores the information on the cloud. This negates the need for expensive and time-consuming high-performance computing. The company’s platform can be accessed instantaneously around the world on any device.

About the Pointerra share price

The Pointerra share price has had a stellar performance over the last six months, rising by 1,163%. No doubt shareholders who invested back in May and held onto their Pointerra shares, would be smiling with these incredible gains.

Reaching an all-time high of 67.5 cents in September, Pointerra has experienced a rapid acceleration of interest in its cloud-based platforms recently. At the start of this month, the Ponterra share price was sitting at 31 cents before increasing to today’s level, highlighting its volatility.

The company has a current market capitalisation of around $355 million today.

More reading

• Is the CBA (ASX:CBA) share price overvalued?
• The Ioneer (ASX:INR) share price has rocketed up 11% today and 61% in November
• HUB24 (ASX:HUB) share price edges lower following AGM update
• Monash IVF (ASX:MVF) share price lower despite forecasting strong earnings growth
• Which of these ASX bank shares offers the highest dividend?

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointerra Limited. The Motley Fool Australia has recommended Pointerra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Pointerra (ASX:3DP) share price falls 6% despite positive update appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2HGIoJw

The Commonwealth Bank of Australia (ASX: CBA) share price has been a very strong performer in November.

Since the start of the month, the CBA share price has climbed an impressive 18% to $81.33.

Is it too late to buy CBA shares?

According to a note out of Goldman Sachs, investors might be better off looking at other investment options in the banking sector.

Its analysts have recently retained their sell rating but lifted the price target on the bank’s shares slightly to $65.84.

This price target implies potential downside of 19% for its shares over the next 12 months excluding dividends.

Why is Goldman Sachs bearish on the banking giant?

Goldman Sachs has issues over the bank’s valuation and the premium its shares trade at in comparison to the rest of the big four.

Following the release of its first quarter update this month, the broker said: “While CBA’s balance sheet is strong, with a sector leading capital and provisioning position, CBA’s operational performance in 1Q21, particularly as it relates to costs, does not justify the 24% premium it is currently trading on versus peers (versus 15% 15-yr average).”

Which bank does the broker like?

Goldman Sachs’ top pick in the sector is National Australia Bank Ltd (ASX: NAB).

It explained: “NAB remains our preferred major bank exposure, based on i) our view that it will deliver better than peer revenue growth, supported by its superior management of the volume/margin trade-off, ii) its investment spend which appears further progressed relative to peers allowing it to be more selective towards where resources are directed, contributing to its broadly flat FY21 cost target (c.0-2%), and iii) when combined, drives our forecast for NAB to deliver top of peer PPOP per share growth over the next three years.”

However, it is worth noting that the broker put a price target of $22.96 on NAB’s shares last week. But due to its strong share price gain, it is actually now trading above this at $23.60.

I suspect that Goldman Sachs will revisit its recommendation following NAB’s annual general meeting in the coming weeks. So stay tuned for that.

More reading

• Which of these ASX bank shares offers the highest dividend?
• The real earnings growth driver for ASX bank stocks in FY21 isn’t what you think
• Why the Cann Group (ASX:CAN) share price is up 76% this week
• CBA and Zip were among the most traded shares on the ASX last week
• Is the CBA (ASX:CBA) share price a buy?

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Is the CBA (ASX:CBA) share price overvalued? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/367wiCI

The Ioneer Ltd (ASX: INR) share price rocketed up 11% in afternoon trading. That makes the lithium stock a top performer among ASX shares listed on the All Ordinaries Index (ASX: XAO).

It’s also enough to bring Ioneer’s share price gains to 61% so far in November. And investors who picked up shares on 28 September, less than 2 months ago, will be sitting on gains of 190%.

We’ll look at what’s driving the Ioneer share price surge in a tick. But first…

What does Ioneer do?

Ioneer is a lithium project developer. Its low-cost Rhyolite Ridge lithium-boron project is located in the United States state of Nevada. The company forecasts the project will be ‘construction ready’ in the second quarter of 2021.

Why is the Ioneer share price surging higher?

Investors are banking on Ioneer’s Rhyolite Ridge project coming through with low cost lithium. The US Bureau of Land Management gave the project the green light on 31 August.

There has been no fresh news released to market today to see the Ioneer share price leap 11%, and the lithium price has been fairly flat this month. But as the world transitions to electric vehicles and battery storage for solar and wind driven energy generation, demand is forecast to surge.

Last Wednesday 18 November, Ioneer reported it had become a founding member of the new Zero Emission Transportation Association (ZETA) in the US.

Ioneer noted that its Rhyolite Ridge Lithium-Boron Project was the most advanced lithium project in the US.

Commenting on its founding status in ZETA, Ioneer managing director Bernard Rowe said:

Ioneer’s mission is to support a sustainable, lower carbon future through the responsible production of lithium carbonate, lithium hydroxide and boric acid, which are vital materials to reducing greenhouse gas emissions and creating a globally sustainable future. We view a global shift to electric vehicles as central to our mission.

As the most developed lithium project in the United States, not only are we excited to be working closely with fellow leaders across the automotive supply chain, we understand the importance of ensuring US national policy supports a greener future.

That greener future isn’t just part of US national policy, though electric vehicles and green energy will surely get a boost under President-elect Joe Biden. The United Kingdom also aims to be a world leader in the field, announcing the ban on sales of new petrol and diesel vehicles commencing in 2030. Canada plans to follow suit in 2035.

With the Ioneer share price up 190% in less than 2 months, could this be one company to keep an eye on?

More reading

• Strike Energy (ASX:STX) share price rises on business update
• Here’s why the Clean TeQ (ASX:CLQ) share price tumbled 10% today
• APA Group (ASX:APA) share price flat despite major project news
• Why the Tower (ASX:TWR) share price is up 4% today
• Why the Next Science (ASX:NXS) share price dropped 9% today

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The Ioneer (ASX:INR) share price has rocketed up 11% today and 61% in November appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3q56oqT

The HUB24 Ltd (ASX: HUB) share price is trading lower on the day of its annual general meeting.

In afternoon trade the investment platform provider’s shares are down 0.25% to $20.70.

What happened at the HUB24 annual general meeting?

Management began the virtual event by taking investors through its performance in FY 2020.

During the 12 months ended 30 June, HUB24 continued its impressive form and delivered further strong growth across all key metrics.

Group revenue increased 14%, Platform revenue increased by 37%, and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 60% to $24.7 million.

HUB24’s chairman, Bruce Higgins, commented: “In an environment of continued disruption in the financial services industry and a global pandemic we have continued our strong growth trajectory since the last Annual General Meeting. This disruption including the incumbents divesting of their wealth businesses, continues to create significant opportunity for HUB24 to continue to grow.”

The good news for shareholders is that this positive form has continued in FY 2021.

Management advised that market conditions continue to be favourable for its ongoing growth and, together with its recently announced acquisitions, it is looking forward to continuing to deliver on its strategic objectives.

Outlook.

While no guidance was provided for FY 2021, the company’s chairman revealed that HUB24 is targeting very strong inflows over the next two years for its existing business.

Mr Higgins commented: “We are targeting strong net inflows in the FUA range of $28 billion to $32 billion by 30 June 2022 and, subject to any unexpected impacts arising from the pandemic or broader economy, our profitable growth trajectory to continue. These expectations do not include contributions from the recently announced proposed M&A transactions and are based on our existing operations.”

This compares to FUA of $17.2 billion in FY 2020 and $19 billion at the end of September. The high end represents an increase of 86% on FY 2020’s numbers.

More reading

• 3 mid-cap ASX shares with recent price pullbacks
• These were the 3 best-performing ASX 200 tech shares in October
• 5 ASX 200 broker updates after quarterly earnings season
• ASX 200 sinks 1.6%, ANZ (ASX:ANZ) reports FY20 result
• Xplore Wealth share price surged to a 2-year high today on M&A fever

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 Hub24 Ltd. The Motley Fool Australia has recommended Hub24 Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post HUB24 (ASX:HUB) share price edges lower following AGM update appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/368pPag

The Monash IVF Group Ltd (ASX: MVF) share price is trading lower following the release of a trading update and its guidance for FY 2021 at its annual general meeting.

In afternoon trade the fertility treatment company’s shares are down slightly to 78.2 cents.

Trading update.

According to the release, trading conditions have improved greatly over the last few months.

Management advised that following the COVID impact on its fourth quarter FY 2020 performance, increased demand for its services has led to stimulated cycles growing 23.1% between July and October compared to the prior corresponding period.

This improvement has also been experienced in its international business, with Kuala Lumpur stimulated cycles increasing 16.2% during the period.

One part of the company which wasn’t impacted during the pandemic was its Ultrasound businesses. They remained open throughout the pandemic and have continued to perform strongly. For the four months to the end of October, it reported a 10.7% increase in ultrasound scans compared to the prior comparative period.

And while management expects its overall growth to moderate, it remains confident that activity will continue to grow at above historical levels for the remainder of FY 2021. This is based on activity experienced in November and the current patient pipeline, which provides a good indication of activity in the short to medium term.

Though, this remains subject to any COVID-19 developments in the markets it operates in.

FY 2021 guidance.

In light of the above, management expects its first half reported net profit after tax to be approximately $14 million to $14.5 million. This will be up 75% to 81% on the $8.1 million it delivered in the prior comparative period.

Excluding non-regular items, first half net profit after tax is expected to grow 21% to 26% to between $11 million to $11.5 million. Monash IVF’s non-regular items include a $3.5 million impact from the Job Keeper Subsidy payments.

Looking to the second half, management expects its earnings growth to slow but still believes it can outperform the prior corresponding period.

It explained: “Earnings growth in 2H21 is expected to moderate as compared to 1H21 following recovery of pent up demand in Q1FY2021, however the Company expects that earnings growth can be achieved in 2H21 (as compared to 2H20) given growth in the current IVF patient pipeline and notwithstanding any further implications from COVID-19.”

Finally, this is likely to mean that its dividend payments will begin again.

“Given anticipated earnings growth during FY2021, cash flow and balance sheet positions, the Company is likely to recommence payment of dividends, but remains subject to business performance and any further adverse implications from COVID-19,” it added.

More reading

• Which of these ASX bank shares offers the highest dividend?
• Better buy: Alibaba vs. Amazon
• Why is the McGrath (ASX:MEA) share price surging 8% today?
• Top brokers name 3 ASX shares to sell today
• Why the AnteoTech (ASX:ADO) share price is rocketing 28% higher

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Monash IVF (ASX:MVF) share price lower despite forecasting strong earnings growth appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3nUyEL2

Which of the ASX banks offers the highest dividend yields for income investors today? It’s a vexing question to be sure, made even more so by the events of 2020.

If you cast your mind back to 2019, you may remember that the big four ASX banks weren’t exactly making their income-focused investors too happy then either. National Australia Bank Ltd (ASX: NAB) reduced its long-standing 99 cents per share biannual dividend to 83 cents per share last year. It was a similar story at Westpac Banking Corp (ASX: WBC), which cut its own longstanding payout of 94 cents a share to 80 cents for 2019’s final dividend. And Australia and New Zealand Banking Group Ltd (ASX: ANZ) cut the level of franking its investors were entitled to on their shareholder payouts. Only Commonwealth Bank of Australia (ASX: CBA) shareholders escaped 2019 without a reduction in dividends or franking credits.

But fast forward again to 2020, and the situation is far more dire for ASX bank shareholders. 2020 has seen dividends all but dry up from the big four – which is a big deal considering many (possibly most) investors who buy bank shares do so for the dividends.

So what exactly have the big four paid out in 2020? Well, it’s worth noting that the Australian Prudential Regulatory Authority (APRA) mandated dividends be more or less curtailed between April and June, and capped at a maximum of 50% of earnings afterwards. There have been recent rumblings of this cap being removed, but we’ll have to wait and see if that comes to fruition.

What dividends have been paid by ASX bank shares in 2020?

So, CBA shareholders were lucky enough to receive their 2020  interim dividend before the coronavirus crisis kicked off. March saw an interim dividend of $2 a share paid out to CBA shareholders. This was complemented by CBA’s final dividend of 98 cents per share that was paid out on 30 September.

So based on the current CBA share price of $81.49 (at the time of writing), this dividend equated to a trailing yield of 3.66%.

But what of the other banks? Well, Westpac is the only big four bank that didn’t end up paying an interim dividend at all in 2020. Westpac shareholders will get just one payout, a 31 cents per share final dividend that will hit bank accounts on 18 December. That gives Westpac a trailing dividend of 1.5%, which would equate to a 3% forward yield if we assume Westpac pays another two dividends of 31 cents per share each in 2021.

ANZ did pay two dividends in 2020 – an interim payout of 35 cents per share and a final dividend of 25 cents per share. That would give ANZ shares a trailing yield of 2.56% on current prices.

Finally, let’s look at NAB. NAB’s dividends have been consistent in 2020 – it has paid out two dividends of 30 cents per share each. That means this ASX bank offer a trailing yield of 2.54% based on the current NAB share price.

Foolish takeaway

On the raw numbers, it seems CBA shareholders have done the best in terms of receiving dividend income in 2020, as well as just on a pure ‘trailing yield’ basis. However, investors should keep in mind that CBA was the only bank lucky enough to cough up a 2020 dividend before the coronavirus pandemic really got going. As such, it’s not really a fair ‘apples-to-apples’ comparison here.

More reading

• The real earnings growth driver for ASX bank stocks in FY21 isn’t what you think
• Why the Cann Group (ASX:CAN) share price is up 76% this week
• CBA and Zip were among the most traded shares on the ASX last week
• Why Origin, Qantas, Webjet, & Westpac shares are storming higher
• Is the CBA (ASX:CBA) share price a buy?

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Which of these ASX bank shares offers the highest dividend? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3fClzmK

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.

Alibaba Group Holding Ltd (NYSE: BABA) and Amazon.com, Inc (NASDAQ: AMZN) are two of the world’s largest e-commerce and cloud infrastructure companies.

Alibaba owns the largest online marketplaces in China, and Alibaba Cloud is the country’s leading cloud platform. Amazon is the e-commerce leader in the U.S., Europe, and other markets, and it owns AWS (Amazon Web Services), the largest cloud platform in the world.

Alibaba went public six years ago, and its stock has risen nearly 300% from its initial public offering (IPO) price. But Amazon’s stock surged more than 830% during the same period. Let’s see why Amazon attracted more bulls than Alibaba, and whether or not that trend will continue.

The differences between Amazon and Alibaba

Amazon generates most of its revenue from its online marketplaces, which include a mix of its own offerings and products from third-party sellers, but it generates most of its profits from AWS.

AWS’ higher-margin revenue enables Amazon to expand its e-commerce business with lower-margin strategies, including discounts, free shipping options, cheap hardware, and digital perks for Prime subscribers. It also supports the ongoing expansion of the company’s brick-and-mortar stores.

Alibaba, which also generates most of it revenue from its online marketplaces, doesn’t take on any inventories. Its top Chinese marketplaces, Taobao and Tmall, are paid listing platforms that link buyers to sellers, and its logistics unit Cainiao fulfills those orders.

This less capital-intensive approach keeps Alibaba’s core commerce business profitable. However, its other three businesses — Alibaba Cloud, the Digital Media and Entertainment unit, and the Innovation Initiatives unit — are not. Therefore, Alibaba subsidises the growth of these unprofitable segments with the core commerce segment’s profits.

Amazon is firing on all cylinders

Amazon’s revenue and earnings rose 20% and 14%, respectively, in 2019. But in the first nine months of 2020, Amazon’s revenue rose 35% year-over-year as its earnings surged 68%.

That acceleration was attributed to the COVID-19 crisis, which significantly boosted its online sales and the usage of AWS-based cloud services. Its Prime ecosystem, which surpassed 150 million subscribers at the end of 2019, likely continued expanding during the pandemic.

AWS’ revenue rose 30% to $32.6 billion, or 13% of Amazon’s top line, during those nine months. The cloud unit’s operating profit jumped 51% to $10 billion, or 62% of its operating income — and its operating margin expanded year-over-year from 26.3% to 30.5%.

Those numbers indicate AWS isn’t losing ground to its top cloud rival, Microsoft Corporation‘s (NASDAQ: MSFT) Azure. It also indicates AWS’ profits will keep supporting the growth of Amazon’s online marketplaces. 

Amazon’s North American unit’s operating margin contracted year-over-year during the first nine months, mainly due to higher COVID-19 safety expenses and fulfillment costs, but its international business finally generated a slim operating profit after years of operating losses.

Analysts expect Amazon’s revenue and earnings to rise 35% and 52%, respectively, this year. Next year, they expect its revenue and earnings to rise 18% and 30%, respectively, as the pandemic passes.

Alibaba faces a few growing pains

Alibaba’s revenue rose 35% in fiscal 2020, which ended on March 31, and its adjusted earnings rose 38% (which exclude its acquisition of a 33% stake in its fintech affiliate Ant Group and other one-time gains and losses).

In the first half of fiscal 2021, Alibaba’s revenue grew 32% year-over-year as its adjusted earnings rose 28%. Unlike Amazon, Alibaba didn’t experience a huge uptick in pandemic-induced sales, for two reasons.

First, Alibaba faces more online competitors in China, including JD.com Inc (NASDAQ: JD) and Pinduoduo Inc (NASDAQ: PDD), than Amazon faces in its other top markets. Second, China largely contained the pandemic by April, which limited its overall impact on online sales.

Alibaba is also relying more heavily on the core commerce business’ lower-margin segments — including brick-and-mortar stores, cross-border marketplaces, and Cainiao — to boost the segment’s growth. But that strategy reduced its core commerce unit’s adjusted earnings before interest, taxes, depreciation and amortisation (EBIDTA) margin year-over-year from 40% to 37% in the first half, and that erosion could continue — and ultimately impact its ability to support its unprofitable cloud, media, and innovative business segments.

Analysts expect Alibaba’s revenue and earnings to rise 47% and 36% this year, respectively, as its growth improves in the second half. Next year, its revenue and earnings are expected to grow 31% and 21%, respectively.

However, those forecasts could still be derailed by the recent failure of Ant Group’s IPO, which was expected to boost Alibaba’s profits, and new antitrust rules aimed at reining in Alibaba and other Chinese tech giants.

The valuations and verdict

Amazon trades at 58 times forward earnings, while Alibaba has a much lower forward price-to-earnings (P/E) ratio of 28.

Investors are paying a premium for Amazon’s stock because its e-commerce and cloud businesses have been growing like weeds throughout the pandemic. Meanwhile, Alibaba’s valuation seems depressed by the Ant Group debacle and new regulatory threats in both China and the U.S.

I personally own Amazon instead of Alibaba, but I think Alibaba’s long-term growth potential and valuation make it a better buy right now. Alibaba’s stock will remain volatile, but it’s still China’s top e-commerce and cloud company — and its stock is far too cheap relative to its earnings growth.

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

More reading

• Here are the US shares that CommSec customers are buying
• ‘Australia’s Amazon’ debuts on ASX next week
• Global fund managers are bullish on these 3 things
• Here are the US shares that CommSec customers are buying
• What COVID-19? World’s 5 most valuable brands are up 54%

Leo Sun owns shares of Amazon and JD.com. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, 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 Alibaba Group Holding Ltd., Amazon, JD.com, and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon and JD.com. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Better buy: Alibaba vs. Amazon appeared first on Motley Fool Australia.

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

from Motley Fool Australia https://ift.tt/3fEPY3J

McGrath Ltd (ASX: MEA) shares are on the rise today after the company provided a trading update. At the time of writing, the McGrath share price has surged 8.33% to 45.5 cents today. This comes after the company reported its earnings will be in the range of $6 million to $6.5 million for the first half of FY21 – an increase of $4.7 million on the same time last year.

What else is moving the McGrath share price?

Investors are driving the McGrath share price higher as the property services provider advised, with its projected earnings, dividend payments are now a possibility from the first half of FY21. It says that the strong projection is a result of a relatively robust residential real estate market driven by historically low mortgage rates. The company expect these low rates to continue.

McGrath also reported a strong balance sheet with $22.1 million in cash, compared to $10.2 million in FY19 – and no debt.

It says that both transaction volumes and average selling prices across the McGrath network throughout different states have exceeded the prior year in the first four months of FY21.

McGrath chief executive, Eddie Law, however, offered some caution on what lies ahead. He said:

We are satisfied with the continued recovery of earnings, amid an improved outlook on property price movement from six months ago and a long-term low interest rate environment. Looking forward, there remains much discussion regarding the impact of house prices in the media, and there is now an improved outlook on price movement from six months ago, however sale transaction volumes remain a key driver of the McGrath’s financial results.

With the scheduled end of JobKeeper and deferred mortgages programs still yet to be determined, along with other macro factors impacting consumer confidence, there is still uncertainty as to whether the momentum evidenced in the first half of FY21 will be maintained in the second half results.

What McGrath did to turn things around 

Earlier this year, McGrath implemented some major cost cutting initiatives in response to the slowing market caused by the pandemic. At the time, the company announced its board members were to have their remuneration cut by 40% for three months between May and July. At the same time, 120 employees who earned more than $70,000 a year would take a 30% pay cut in exchange for working 30% less over the same three-month period.

As a result of these measures, the company had reported improved full year earnings of $3.7 million in FY20, compared to a loss of $6.4 million the year prior. Today’s half year earnings projection of around $6 million provides another signal that the company is on a turnaround phase. 

The McGrath share price in 2020

The McGrath share price started the year trading at 33 cents, before slumping to a low of 15 cents in March. Since then, the housing recovery has helped its share price to rebound.

The McGrath share price reached its 52-week high of 46 cents today. However, it is still much lower than its debut initial public offer (IPO) price of $2.10 in 2015. The company currently commands a market capitalisation of $70 million. 

More reading

• Top brokers name 3 ASX shares to sell today
• Why the AnteoTech (ASX:ADO) share price is rocketing 28% higher
• With the Moderna share price blasting up, have the forward-looking markets got it right?
• Why Aroa Biosurgery, Straker, Virgin Money, & Whitehaven shares are dropping lower
• 3 reasons the ASX 200 could soar to new record highs

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why is the McGrath (ASX:MEA) share price surging 8% today? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Jdkqpw