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The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is trading lower on Thursday morning after brokers responded to yesterday’s annual general meeting update.

At the time of writing, the pizza chain operator’s shares are down 1.5% to $85.61.

What was in Domino’s update?

Yesterday Domino’s released a trading update at its annual general meeting which revealed that its same store sales were up 8.4% during the first 17 weeks of FY 2021.

Management didn’t provide any details in relation to where its growth was coming from exactly. However, it did note that all regions have delivered same store sales growth above its 6% medium term target.

Another positive from the update was that management revealed that Franchisee profitability is at record levels across multiple countries. It feels this underpins the health of its store network and expects it to be supportive of future demand for store growth.

Speaking of which, so far in FY 2021, Domino’s has opened 74 new stores. This comprises 38 in Japan, 6 in Australia-New Zealand, and 30 in Europe.

Finally, the company has reiterated its medium term (3 to 5 years) target of same store sales growth of 3% to 6% per annum and organic new store growth of 7% to 9%.

What did brokers think of the result?

According to a note out of UBS, Domino’s delivered an update in line with its expectations. However, it notes that its same store sales growth has slowed over the last 7 weeks.

In light of this and its belief that its shares are expensive, it has retained its sell rating and lifted its price target slightly to $72.00.

Elsewhere, analysts at Goldman Sachs have retained their neutral rating and $83.90 price target on the company’s shares.

While it is currently tracking ahead of its expectations, it isn’t enough for a change of rating just yet due to valuation reasons.

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• Why Domino’s, Oil Search, Resolute, & Zip shares are dropping lower

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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.

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The Scentre Group (ASX: SCG) share price currently trades at more than a 40% discount to its pre-COVID levels. Lockdown measures took a serious toll on retail real estate investment trusts (REITs) like Scentre and Vicinity Centres (ASX: VCX) with factors such as rental disputes and the need to take on more debt weighing heavily on share prices. Could the Scentre Group’s Q3 operational update provide investors with the confidence that retail REITs are getting back on track? 

Scentre Group operational update 

Scentre Group today announced that all 42 Westfield Living Centres continue to remain open and trading with the highest level of health and safety standards implemented. 92% of its retailers’ stores are now open and trading (including in Victoria), with more stores in Victoria expected to reopen over the coming weeks. Customer visits during the September 2020 quarter were 90% of the same time last year across the portfolio (excluding Victoria).

The company’s portfolio occupancy was 98.4% at the end of September 2020. The group has reached agreements regarding COVID arrangements with a total of 3,187 retailers, representing 89% of the 3,600 retail brands in its portfolio. 

Scentre Group has experienced a rapid improvement in its gross rent cash collections for the quarter. Monthly gross rental billings hit a trough back in April and May, falling as much as 28% and 35% respectively. For the September quarter, monthly gross rental billings averaged 85% or $542 million, while October currently sits at 96% or $203 million. 

In terms of retailer in-store sales growth, comparable like-for-like specialty in-store sales (excluding Victoria) were down 1.9% for the September quarter while comparable majors in-store sales were up 1.0%. 

Scentre Group share price higher on update 

At the time of writing, the Scentre Group share price is today trading 2.15% higher at $2.38 following the company’s operational update. Investors are clearly encouraged by seeing the company’s operational metrics recover closer to their pre-COVID levels. Scentre also announced that it has the intention, subject to unforeseen circumstances, to pay a dividend in early 2021 from surplus net operating cash flows received in 2020.

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Motley Fool contributor Lina Lim 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.

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The Estia Health Ltd (ASX: EHE) share price has dropped lower on Thursday following the release of its first quarter update.

In morning trade the aged care operator’s shares are down over 1% to $1.34.

What happened in the first quarter?

According to the release, the occupancy level of the company’s homes (excluding Victoria) averaged 93.7% during the first quarter and stood at 93.2% on 31 October. Whereas in Victoria, Estia Health’s average occupancy during the quarter was 86.8% and its spot occupancy was 83.2% at 31 October 2020.

This meant that total occupancy averaged 91.3% in the first quarter and stood at 89.7% at 31 October 2020.

In light of this, the company recorded total first quarter revenue of $158.9 million. This includes $0.8 million of temporary funding and $10.9 million of imputed DAP revenue on RAD balances in accordance with AASB 16.

Management explained: “Revenues were impacted by the decline in occupancy experienced in Victoria. In addition, the Group took the decision to cease resident billings at a number of homes during COVID-19 outbreaks in Victoria, and ceased Additional Services billings at all homes in Victoria for 3 months as a result of limitations on the ability to deliver those services during the State-wide lockdown. All homes in Victoria are now billing residents as normal.”

Another negative was that Estia Health experienced a jump in its costs because of the pandemic.

It incurred incremental employee costs due to the impact of COVID-19 of approximately $6 million for the quarter. This comprises $4.4 million in Victoria and $1.6 million in other states.

The majority of the costs were incurred in managing the outbreaks in metropolitan Melbourne at the height of the second wave in its homes at Ardeer, Heidelberg West, Keysborough, and Keilor Downs.

Estia Health has also incurred and continues to incur costs associated with additional Resident Liaison Officers and Infection Prevention Control supervision and training at all homes.

Outlook.

Due to the uncertainty caused by the pandemic, management has been unable to provide guidance at this stage.

It commented: “The scale and duration of the COVID-19 pandemic remain extremely uncertain and the Group is not able to quantify with any degree of certainty at this stage the expected future financial impact of the enduring pandemic, including the impact on revenues, costs or funding support from the Government by way of increased subsidies or grants.”

More reading

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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.

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The National Australia Bank Ltd (ASX: NAB) share price is pushing higher this morning following the release of its full year results.

At the time of writing the banking giant’s shares are up 1% to $18.87.

How did NAB perform in FY 2020?

For the 12 months ended 30 September, NAB reported a 36.6% decline in cash earnings to $3,710 million.

This decline was partly driven by a number of previously announced notable items. Excluding these items, the bank’s cash earnings would have been down 25.9% to $4,733 million in FY 2020.

NAB reported a 1 basis point reduction in its net interest margin (NIM) to 1.77% for the year due to its Markets & Treasury businesses, which felt the impact of holding higher liquid assets. Excluding this, its net interest margin was flat, with the benefits of home loan repricing and lower wholesale funding costs offset by impacts of the low interest rate environment and competitive pressures.

The bank experienced an increase in its expenses in FY 2020. They rose 10.7% including notable items and 2% excluding them. The latter reflects costs associated with the implementation of its strategy refresh, combined with higher technology-related costs, salary increases, and COVID-19 related costs. Management advised that this was partly offset by productivity benefits, lower performance-based compensation, and reduced travel and entertainment costs.

At the end of the financial year, NAB’s group common equity tier 1 (CET1) ratio stood at 11.47%, up 109 basis points from September 2019.

Thanks to this strong balance sheet, the bank was able to declare a final dividend of 30 cents per share. This brings its full year dividend to 60 cents per share, representing a 64% reduction compared with FY 2019. Management advised that this reduction reflects the uncertain outlook for COVID-19 impacts and APRA’s revised dividend guidance, balanced with consideration of its strong capital position.

NAB CEO, Ross McEwan, commented on its result, stating: “Stronger provisions are the right thing to do but have impacted FY20 cash earnings, which are down 25.9% compared with FY19 (ex large notable items). In addition, low interest rates and lower fee income contributed to a decline in revenue. While we are acutely aware of the need for disciplined cost management, costs rose in FY20 as we adjusted to the COVID19 environment and started implementing our strategy refresh announced in April.”

Outlook.

Mr McEwan appears positive on the bank’s future thanks to the progress it is making with its strategy.

He explained: “We are progressing well with our strategy refresh which is creating a simpler, more accountable business, committed to execution. We have embedded a new organisational structure with end-to-end accountability. We are clear about our priorities, and we are focusing on our customers and colleagues to drive sustainable performance over time.”

The chief executive also spoke about the economic outlook. NAB is expecting a gradual economic recovery for Australia.

“Economic activity in Australia has been materially impacted by COVID-19, with GDP falling 7.0% in the June quarter 2020 and forecast to decline 4.7% over the year to December 2020. Recovery is likely to be gradual, supported by stimulatory fiscal and monetary policy combined with expected relaxation of Victorian restrictions and a more complete reopening of state borders,” he said.

“This sees forecast GDP growth of 4.6% over 2021 and 2.9% over 2022, albeit the outlook for the business sector remains highly uncertain and the pace of recovery is likely to be uneven across industries,” he added.

As for NAB, the bank is aiming to improve the resilience of its business and build momentum for recovery from the COVID crisis. And while this will lead to an increase in expenses by 0% to 2% in FY 2021, management believes it is worth the investment.

It commented: “Over time, the successful delivery of our refreshed strategy is expected to result in stronger, safer growth in our chosen businesses, more engaged colleagues and more satisfied customers, a more efficient organisation with absolute costs (excluding large notable items) targeted to be lower over three to five years, and improved, more sustainable shareholder returns.”

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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.

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The Inghams Group Ltd (ASX: ING) share price will be on watch today following the company’s release of a business update.

Let’s take a look and see how the poultry producer tracked for the start of the new financial year.

Business update

For the quarter ending 30 September, Inghams reported a strong return in poultry sales volumes, nearing pre COVID-19 levels.

Core poultry volumes sold in the first quarter of FY21 increased by 6.2% to 110.9 kilotons over the prior corresponding period. The surge in momentum also reflected a 7.5% uplift on the prior three months. The growth was driven in both Australia and New Zealand, despite COVID-19 restrictions in Victoria which saw the Inghams Thomastown plant shutdown.

During the quarter, Inghams continued to reduce poultry production levels due to the pandemic. The company is initiating further cuts in inventory levels by the end of FY21. This will be supported by the additional demand over the Christmas holiday period. So far, total poultry inventory has reduced by $16 million in the first 17 weeks of FY21.

Inghams noticed a slight increase in feed costs, however it said that crop harvest for late 2020 is appearing favourable. Moreover, feed prices are expected to be significantly lower in the second half of FY21, resulting in cost efficiency by Q4.

COVID-19 response

Stage 4 lockdowns in Victoria throughout August and September, and level 2 restrictions in New Zealand impacted Inghams’ facilities. In response, the company managed to navigate around the constraints imposed through operating on a reduced workforce. Customer demand was met while maintaining full operations across all its plants.

Commenting on the impact, Inghams CEO, Mr Jim Leighton, said:

While navigating continued complexity associated with the COVID-19 pandemic in the first quarter of the financial year, we have maintained an unwavering commitment to the safety and employment of our people, while fulfilling our role as an essential service provider to the people of Australia and New Zealand.

The speed and scale of our response, particularly in the second-waves impacting Victoria and Auckland, was made possible by the enormous efforts of our people who worked together to keep the business running to ensure customer demand was met.

Dividend policy review

Management advised that it has reviewed the current dividend policy following the adoption of the new leases on its balance sheet.

The revised dividend policy is expected to have a pay-out ratio of between 60% and 80% of underlying net profit after tax. The increase in the top end of the dividend range is said to provide the board flexibility to determine dividends going forward.

From FY21, Inghams will begin to report its underlying results inclusive of the impact of its leases. It is anticipated that the company will pay an FY21 interim dividend to shareholders in April 2021.

Inghams Chair, Mr Peter Bush, spoke about the new change. He said:

We were pleased to provide shareholders with a fully franked dividend of 14 cents per share in relation to the 2020 financial year, reflecting a payout ratio of 66 per cent of Underlying NPAT pre AASB 16, within our prior target payout range of 60 to 70 per cent. This was particularly important in light of the challenges that many people have faced throughout the COVID-19 pandemic.

About the Inghams share price

The Inghams share price has had a volatile year. Whilst quickly recovering from the March crash, the company’s shares have been on a wild ride since then. The Inghams share price came close to its pre-pandemic highs in July and August this year before commencing another downward trend. Having closed yesterday’s session at $2.85, the Inghams share price is currently 16.67% lower in year-to-date trading.

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• These are the 10 most shorted shares on the ASX

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. 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.

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The Credit Corp Group Limited (ASX: CCP) share price could be one to watch on Thursday following a positive AGM and FY21 performance update. 

About Credit Corp 

Credit Corp is Australia’s largest provider of financial services to the credit impaired consumer segment. It purchases past-due consumer and small business debts from major banks, finance companies, telecommunication companies and utility providers in Australia, New Zealand and the US. It works with customers by adopting a flexible approach to affordable repayment plans and solutions. 

Upbeat AGM and performance update 

Credit Corp’s AGM highlights solid debt buying operational metrics with a strong first quarter. It cites that Australia and New Zealand is tracking to guidance expectation with a step-down in October in-line with reductions in government and private sector support. While the US business is ahead of expectation despite expiry of key support measures such as federal unemployment supplements in July. Its ANZ and US debt buying business delivered a 4% and 34% increase in collections to $100 million and $36 million respectively. 

The business has experienced an improvement in demand and applicant quality in recent months. Application volumes are increasing due to superannuation withdrawal and other support being wound back. New customer approval rates are now at 67% of pre-COVID-19 levels compared with 41% in June. Its gross loan book is stabilising in October 2020 rather than December 2020 as expected. 

Solid start to FY21 

ANZ debt buying has had a strong quarter of collections with a 51% increase in purchasing pipeline. The company sees debt purchasing to rebuild as credit issuers return to market. 

In the US, collections are slightly ahead of expectations despite the expiry of key support measures. There was limited movement in its purchasing pipeline in the US due to absence of further price declines. 

Its consumer lending business is also experiencing volumes ahead of schedule and a stabilising loan book balance. The company sees demand to rebuild as support is withdrawn from Q1. 

The solid start to FY21 has given the business confidence to reaffirm its previous FY21 guidance. This includes NPAT between $60 million to $75 million and a dividend between 45 cents to 55 cents. This compares to the $15.5 million after accounting for the impairment of purchased debt ledger assets and  additional provisioning arising from the impact of COVID-19 in FY20. NPAT before these adjustments were $79.6 million.  

Foolish takeaway

Credit Corp highlighted an ambitious long-term growth target of a Return on Equity (ROE) of 16% to 18% in its AGM presentation. The Credit Corp share price is up more than 200% from its March sell-off lows, however still 50% below its pre-COVID-19 levels. 

More reading

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Motley Fool contributor Lina Lim 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.

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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.

Amazon.com Inc (NASDAQ: AMZN) has been one of the most influential companies of the last 20 years, and its dominance of industries ranging from e-commerce to cloud computing makes it unique even among FAANG stocks.

That singular “Day One” mentality Amazon management operates under was on display once again when the company reported third-quarter earnings last week. Its headline numbers of 37% revenue growth to $96.1 billion and a near doubling in operating income grabbed most of the attention. But two financial metrics hidden deeper in Amazon’s earnings show what makes the company so special and why it remains a growth juggernaut even as it’s now the second-biggest company by revenue in the U.S., and could soon be the biggest in the world.

Keep reading to see two stunning numbers from Amazon’s latest report.

1. It added 350,000 employees in just four months

Amazon has been ramping up hiring throughout the coronavirus pandemic, adding 175,000 employees early on, and in the third quarter it grew its workforce by a whopping 250,000. In the first month of the fourth quarter, it hired another 100,000 new employees as it hosted Prime Day in October and prepared for the holiday season, its busiest time of year.

Amazon hired across multiple divisions, adding jobs in its warehouses, logistics operations, Amazon Air, and other frontline divisions, as well as 17,000 white-collar corporate and tech jobs. To put the hiring blitz in perspective, that rate would equal more than 1 million new employees in a year were it to be sustained. The total of 350,000 employees is also more than all but a handful of American companies have in total employees in their operations. In other words, Amazon added an employee base roughly the size of Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B) in just four months. Over the last four quarters, it’s grown its headcount by 50%.

That shows how big the company’s future ambitions are, and the surge in demand it’s experienced from the COVID-19 crisis.

2. 50,000 COVID-19 tests a day

Amazon announced in its first-quarter earnings report that it was embarking on an experiment to develop its own COVID-19 test, spending hundreds of millions of dollars so that it would have adequate capacity to test its own workforce. The company assembled a team including research scientists, procurement specialists, program managers, and software engineers. At the time, CEO Jeff Bezos said, “We are not sure how far we will get in the relevant timeframe, but we think it’s worth trying, and we stand ready to share anything we learn.”

Today, Amazon is on track to administer 50,000 COVID-19 tests daily to employees across 650 sites by November. The U.S. right now is doing about 1.2 million daily tests, meaning Amazon is responsible for about 4% of all COVID-19 tests done in the U.S., though it’s unclear if some of its tests are being deployed to other countries.

Amazon is not a medical laboratory or even a healthcare company. For the company to pivot and ramp up to 50,000 tests a day in a little more than six months after conceiving of the idea is a testament to its ability to come up with quick solutions and its culture of a “bias toward action,” in the words of Bezos.

It’s still Day One

Bezos has made Day One something of a mantra at his company, instilling it in the culture. Day One means that Amazon still thinks and acts like a start-up even though it is now one of the biggest companies in the world. That approach is clear in more ways than the two points above. For example, Amazon is taking steps into healthcare with its launch of Amazon Care, its partnership with Crossover Health, and its acquisition of Pillpack. The company is pioneering tools that eliminate the need for a cashier with its Amazon Go stores and the “Just Walk Out” technology, and it’s pushing the envelope with a new grocery-store brand, improvements in its Alexa voice-activated technology, and many more innovations.

Though its soaring e-commerce growth may be getting all the attention during COVID-19, investors shouldn’t ignore its ability to add 350,000 employees in four months, or the swift ramp-up in COVID-19 testing. Those are qualities that make Amazon special, and they are why the company has been one of the best investments of the last generation.

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

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Jeremy Bowman owns shares of Amazon. John Mackey, CEO of Whole Foods Market, an Amazon 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 Amazon and Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Amazon and Berkshire Hathaway (B shares). 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.

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

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Wilson Asset Management (WAM) is a leading fund manager in Australia with various funds like WAM Capital Limited (ASX: WAM), WAM Leaders Ltd (ASX: WLE) and WAM Research Limited (ASX: WAX). It made the case for some top ASX shares.

The WAM team try to identify undervalued growth businesses. These are some of ASX shares that WAM owned in own of its funds at the end of September 2020:

Transurban Group (ASX: TCL)

WAM describes Transurban as the world’s largest operator of toll road networks with operations in Australia, Canada and the US. According to the ASX, it has a market capitalisation of $37 billion. Transurban is a position in the WAM Leaders portfolio.

WAM says that the ASX share is the beneficiary of record low interest rates, improvement in economic activity as coronavirus restrictions ease and the growing preference for private transport over public transport. The fund manager pointed out that the recent federal budget included increased infrastructure investment.

Sealink Travel Group Ltd (ASX: SLK)

Sealink is Australia’s largest tourism and public transport provider across ferry, bus and light rail networks with established operations in London and Singapore, according to WAM Research. The company is a position in the WAM Research portfolio.

The fund manager explained that the company completed the acquisition of bus operator Transit Systems Group earlier this year and in September it was announced that it was awarded, in Singapore dollars, a $1 billion contract to operate public bus services in Singapore following a competitive tender process.

WAM Research stated that the ASX share has benefited from state borders reopening during the month, and the fund manager sees the potential for earnings upgrades and further acquisitions as catalysts for the company in the future.

At the current Sealink share price, it’s valued at 16x FY23’s estimated earnings, according to CommSec.

Healius Ltd (ASX: HLS)

WAM Capital described Healius as the second largest pathology and third largest radiology provider in Australia. Healius is a position in the WAM Capital portfolio.

The fund manager pointed to the recent news that the Australian Government announced an extension of COVID-19 testing reimbursement and Medicare-subsidised telehealth and pathology services through to March 2021.

WAM Capital expects the extension to support the ASX share’s earnings, particularly as it operates drive-though testing for COVID-19. It also sees cost reduction opportunities and efficiency savings to improve margins over the long term and WAM also sees the potential for acquisitions which can add to earnings after the recent divestment of its medical centres division.

At the current Healius share price, it’s valued at under 22x FY22’s estimated earnings according to Commsec estimates.

Qantas Airways Limited (ASX: QAN)

Qantas is another business that has been negatively impacted by COVID-19 with a severe drop-off of flights and passengers. The Qantas share price is still down by 36% from where it was on 17 January 2020.

The ASX share is a position in the WAM Leaders portfolio. WAM Leaders explained that Qantas shares went up in September as total Australian coronavirus cases declined, the scheduled reopening of interstate borders and a trans-Tasman travel bubble forming.

WAM Leaders said that Qantas has restructured effectively and negotiated with trade unions to drive costs down over the past six months, mitigating the drop in total revenue in the June 2020 quarter. The fund manager believes the company will be able to deliver domestic profits at much lower capacity levels and an increase in domestic tourism will offset weakness in corporate and international travel on the path to gradual normalisation.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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.

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The Pushpay Holdings Ltd (ASX: PPH) share price could be a growth opportunity with high performing fund manager Eley Griffiths investing in the business earlier this year.

An overview Pushpay’s operations

Pushpay says that it provides a donor management system, including doner tools, finance tools and a custom community app and a church management system. Its key target market is the large and medium US church sector.

Not too long ago, Pushpay acquired Church Community Builder which provides software as a service (SaaS) church management system, also in the US. Its platform can be used by churches to connect and communicate with their community members, record member service history, track online giving and perform a range of administrative functions.

Pushpay says that the combined offering of Pushpay and Church Community Builder delivers a “best in class, fully integrated church management system, custom community app and giving solution for customers in the US faith sector. The combined offering from Pushpay and Church Community Builder is called ChurchStaq.

In its FY21 half-year result, the company said that sales of its combined offering outperformed internal expectations which reinforces management’s hypothesis that the majority of customers prefer an integrated end to end solution.

The Pushpay share price has gone up by 189% since the COVID-19 crash low of 16 March 2020. However, it has fallen 14% since 28 October 2020.

Eley Griffiths’ thesis

Fund manager Eley Griffiths took up a position in Pushpay a few months ago.

Manager Ben Griffiths pointed out that the religious donation market is estimated to be around US$100 billion in the US, with Pushpay’s current addressable market being around US$50 billion. In FY20 it had a market share of around 10%.

Mr Griffiths stated that over the last 12 months it has become clear that Pushpay is at an inflection point for both cashflow and earnings. It has transitioned into the phase of growth where it’s optimising and monetising the business. He thinks the accounts are very conservative in how it reports, which is rare for a small cap.

His bottom line is that the next few years for Pushpay will be rewarding and that COVID-19 will accelerate the ongoing trend of donations changing from cash to digital giving.

FY21 half-year result

Yesterday the Pushpay share price dropped 12.7% after the ASX share announced its FY21 half-year result.

It reported large growth across a range of statistics.

Operating revenue increased by 53% to US$85.6 million. Pushpay said it expects to see continued revenue growth as the business executes on its strategy, achieves increased efficiencies and gains further market share in the US faith sector. The ASX share’s total processing volume went up by 48% to US$3.2 billion. 

Pushpay’s gross profit margin improved by three percentage points, up from 65% to 68%. It expects its gross margin to stabilise at around the current level over the rest of FY21.

It boasted of expanding operating margin in relation to its expenses. Compared to operating revenue growth of 53%, the total operating expenses only went up 16%. As a percentage of operating revenue, total operating expenses improved by 12 percentage points, from 50% to 38%. Management expect “significant” operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low.

Its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) jumped by 177% to US$26.7 million. The company increased its EBITDAF guidance again to a range of US$54 million to US$58 million.

Pushpay’s net profit more than doubled to US$13.4 million and operating cashflow went up 203% to US$27 million.

Current valuation

Using data from Commsec, Pushpay is expected to generate earnings per share (EPS) of 26 cents in FY23. That translates to 29x FY23’s estimated earnings at the current Pushpay share price of $7.63.

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Tristan Harrison 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. 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.

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The Iress Ltd (ASX: IRE) share price will be one to watch on Thursday following the release of its third quarter update.

How did Iress perform in the third quarter?

The financial technology company had a positive three months and delivered a 3% increase in revenue compared to the prior corresponding period.

In addition to this, Iress reported a 2% lift in segment profit for the quarter. This means its pro forma segment profit is now up 6% for the first nine months of FY 2020 in constant currency terms.

Management advised that it has achieved 8% revenue growth in the Asia Pacific (APAC) region in the first nine months of the year. This is being driven by ongoing demand for Xplan and Super solutions. This has offset COVID-19 impacting timing of projects in UK.

Outlook.

For the fourth quarter, the company is expecting to achieve another increase in revenue and segment profit and notes that new project work is underway.

It advised that the OneVue acquisition is due to complete on 6 November and expects a seamless integration of advice and execution with significant efficiencies.

In light of this, the company has reinstated its profit guidance for FY 2020. On a constant 2019 currency basis, segment profit, excluding the impact of the OneVue acquisition, is expected to be around the same level as FY 2019’s segment profit result of $152 million.

Iress chief executive, Andrew Walsh, said: “Iress has delivered a consistent performance in Q3. The strength of our recurring revenue model has been clearly demonstrated during 2020. I am proud of the way the team has continued to perform, while mostly working from home. Although there are high levels of uncertainty around Covid-19 transmissions and government restrictions, we are continuing to prioritise the health and wellbeing of our people and delivering service continuity and major projects for clients.”

“We have delivered over 500 client conversions to Xplan this year and two mortgage clients went live in August. The projects to deploy our super administration technology and service are progressing well. QuantHouse is also performing well and has achieved profitability. Covid-19 is impacting the timing of projects and business activity, postponing the revenue growth we envisaged at the beginning of the year,” he added.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended IRESS 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 Iress (ASX:IRE) share price on watch after Q3 update appeared first on Motley Fool Australia.

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