Tag: Motley Fool

The Woodside Petroleum Ltd (ASX: WPL) share price is not a very happy camper right now. At opening trade today, Woodside shares are going for just $18.47 at the time of writing. That’s a rather striking level for one of the ASX’s largest pure oil and gas plays.

Just take a look at the graph below, and you’ll see what I mean:

Yep, and that’s just over the past decade.

You have to go all the way back to 2004 – the year George W. Bush was re-elected US president and Shrek 2 was released – to see the last time Woodside shares traded this low. It goes without saying that 2020 hasn’t been a pretty year for Woodside. The share started the year at $34.47 and climbed as high as $36.38 in January. But then the coronavirus pandemic came, and Woodside shares were smashed. The Woodside share price fell more than 54% between 21 February and 23 March, bottoming out at just $14.93.

So, given this dramatic fall from grace, are Woodside shares in the bargain bin today? Or is this company a falling knife we should steer clear of?

Why are Woodside shares at a 16-year low?

As I mentioned earlier, prior to 2020 we hadn’t seen Woodside shares at these levels since 2004. So what has caused this dramatic fall? In my opinion, we can put it down purely to the coronavirus pandemic. Crude oil is a highly cyclical commodity at the best of times. Because oil is an input into many different industries (transport, plastics, chemicals etc), the world uses more oil in times when the economy is booming. But conversely, oil is also far less in demand when the economic weather turns sour. And the world is now in the midst of one of the worst global recessions in living memory.

Almost overnight, international travel was halted. On top of that, with lockdowns, shutdowns, and working from home, there was suddenly far fewer people driving. Put all that together and we have a massive demand shock to the oil price. As a result, oil cratered from around US$55 a barrel back in February to negative pricing in April (for the first time in history).

Since Woodside is purely in the business of drilling and selling oil, these developments have been calamitous.

Is this a good time to buy Woodside?

When it comes to commodity/resources shares, my philosophy has always been to buy at low points of a commodity cycle. And right now, I still think oil is cheap by historical standards (albeit not at the levels we saw in March and April). As such, I think, if you are comfortable and willing to own an oil stock in your portfolio, now is probably a good time to pounce on Woodside. The world is still very much reliant on oil, and I fully expect the oil price to substantially recover in line with the global economy over the next year or 2. Thus, today’s Woodside share price could well prove to be a great place to open a position.

More reading

• 5 things to watch on the ASX 200 on Thursday
• 3 ASX 200 shares hit with broker downgrades
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• 5 things to watch on the ASX 200 on Monday

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. 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 Woodside (ASX:WPL) share price still at 16-year lows. Time to buy? appeared first on Motley Fool Australia.

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

The Woodside Petroleum Ltd (ASX: WPL) share price is not a very happy camper right now. At opening trade today, Woodside shares are going for just $18.47 at the time of writing. That’s a rather striking level for one of the ASX’s largest pure oil and gas plays.

Just take a look at the graph below, and you’ll see what I mean:

Yep, and that’s just over the past decade.

You have to go all the way back to 2004 – the year George W. Bush was re-elected US president and Shrek 2 was released – to see the last time Woodside shares traded this low. It goes without saying that 2020 hasn’t been a pretty year for Woodside. The share started the year at $34.47 and climbed as high as $36.38 in January. But then the coronavirus pandemic came, and Woodside shares were smashed. The Woodside share price fell more than 54% between 21 February and 23 March, bottoming out at just $14.93.

So, given this dramatic fall from grace, are Woodside shares in the bargain bin today? Or is this company a falling knife we should steer clear of?

Why are Woodside shares at a 16-year low?

As I mentioned earlier, prior to 2020 we hadn’t seen Woodside shares at these levels since 2004. So what has caused this dramatic fall? In my opinion, we can put it down purely to the coronavirus pandemic. Crude oil is a highly cyclical commodity at the best of times. Because oil is an input into many different industries (transport, plastics, chemicals etc), the world uses more oil in times when the economy is booming. But conversely, oil is also far less in demand when the economic weather turns sour. And the world is now in the midst of one of the worst global recessions in living memory.

Almost overnight, international travel was halted. On top of that, with lockdowns, shutdowns, and working from home, there was suddenly far fewer people driving. Put all that together and we have a massive demand shock to the oil price. As a result, oil cratered from around US$55 a barrel back in February to negative pricing in April (for the first time in history).

Since Woodside is purely in the business of drilling and selling oil, these developments have been calamitous.

Is this a good time to buy Woodside?

When it comes to commodity/resources shares, my philosophy has always been to buy at low points of a commodity cycle. And right now, I still think oil is cheap by historical standards (albeit not at the levels we saw in March and April). As such, I think, if you are comfortable and willing to own an oil stock in your portfolio, now is probably a good time to pounce on Woodside. The world is still very much reliant on oil, and I fully expect the oil price to substantially recover in line with the global economy over the next year or 2. Thus, today’s Woodside share price could well prove to be a great place to open a position.

More reading

• 5 things to watch on the ASX 200 on Thursday
• 3 ASX 200 shares hit with broker downgrades
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• 5 things to watch on the ASX 200 on Monday

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. 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 Woodside (ASX:WPL) share price still at 16-year lows. Time to buy? appeared first on Motley Fool Australia.

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

The Link Administration Holdings Ltd (ASX: LNK) share price is dropping lower on Friday morning.

At the time of writing the Link share price is down 1% to $4.89.

Why is the Link share price dropping lower?

Investors have been selling the administration services company’s shares after it released an update on its takeover approach by a consortium comprising Pacific Equity Partners, Carlyle Group and their affiliates.

Earlier this month the consortium made an offer to acquire 100% of the shares in Link by way of a scheme of arrangement with an indicative cash price of $5.20 per share.

This morning the company revealed that it has held a number of discussions with representatives of the consortium. Meetings have also taken place between the parties’ financial, tax, and legal advisors and with a number of shareholders.

Following these meetings and having carefully considered the proposal, the Link board has unanimously concluded that the proposal materially undervalues the company on a control basis and is not in the best interests of shareholders.

Why does it undervalue Link?

The board advised that its confidence in the outlook and fundamental value of Link is underpinned by the significant value inherent in its PEXA business.

It notes that PEXA has delivered strong growth and established a leading market position in digital property settlements. It has also demonstrated accelerated takeup during COVID-19 and is expected to deliver a material return of capital in the coming months.

In addition to this, the board believes the offer doesn’t take into account the early progress made in its transformation plan. This plan will see significant efficiency benefits realised over the coming years.

Nor does it ascribe value to the company’s leading positions in the markets in which it operates, or the expected recovery in market driven revenue as economic activity improves.

PEXA demerger.

While the board advised that it is willing to continue to engage with the consortium, it is also looking at other options.

This includes the potential separation and demerger of the PEXA business.

It commented: “The Board is examining structural alternatives for its portfolio, which includes detailed consideration of a potential separation of Link Group’s interest in PEXA, and a demerger into a separate ASX listed entity. Further work will be undertaken, including engagement with relevant stakeholders such as Link Group’s financiers and other PEXA shareholders.”

More reading

• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• These were the best performing shares on the ASX 200 last week
• ASX 200 ends higher, Link (ASX:LNK) share price shoots 24% higher
• ASX 200 down 0.1%: CBA’s COVID-19 loan deferrals improve, Link receives takeover approach
• Why Evolution, Link, Newcrest, & NEXTDC shares are charging higher

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 Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings 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 Link (ASX:LNK) share price drops lower following takeover update appeared first on Motley Fool Australia.

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

The Insurance Australia Group Ltd (ASX: IAG) share price is dropping lower on the day of its annual general meeting.

At the time of writing, the insurance giant’s shares are down 0.5% to $4.88.

Why is the Insurance Australia share price dropping lower?

Investors have been selling the company’s shares this morning following the release of a first quarter update ahead of its annual general meeting.

That update reveals that for the three months ending 30 September, Insurance Australia has recorded low single digit gross written premium growth. This is despite the company incurring an adverse foreign currency translation effect from New Zealand.

Insurance Australia’s retiring Managing Director and CEO, Peter Harmer, also advised that its insurance profit for the quarter was reflective of the seasonally low incidence of natural peril events in the current period. No actual figures were provided.

In addition, underlying profitability has been similar to the second half of the previous financial year and the company continues to retain a strong capital position. The latter is well above its targeted benchmarks.

Mr Harmer also provided an update on how the pandemic is impacting the company’s business.

He explained: “Within our underlying insurance margin, COVID-19-related effects have been broadly neutral in aggregate during this period, with some benefit from lower motor claims frequency offset by incremental expense and provisioning impacts.”

Outlook.

The soon-to-retire chief executive is optimistic on the company’s outlook.

He commented: “Despite the uncertainty confronting us, including that from COVID-19, we face the future with the confidence that we have a resilient business which is in strong financial shape, and which is well‐ equipped to rise to the challenges presented by this current environment.”

This future will be led by incoming CEO, Nick Hawkins, who commences in the role on 2 November. The company’s Chair, Ms Elizabeth Bryan, believes Insurance Australia is in safe hands.

She commented: “I’m very pleased that we have been able to appoint a new CEO from within the ranks of our current management team. At a time of significant external disruption, we see tremendous value in the stability and continuity that comes from making an internal appointment.”

More reading

• 5 things to watch on the ASX 200 on Friday
• Angry staff at ASX company take industrial action
• ASX 200 rises on mixed day, big gold merger
• ASX 200 down 0.2%: Northern Star & Saracen announce mega merger, IAG settles class action
• Why IAG, Mayne Pharma, Mesoblast, & Temple & Webster shares are tumbling lower

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 Insurance Australia (ASX:IAG) share price lower following Q1 update appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/34j4Ssp

The Beach Energy Ltd (ASX: BPT) share price is pushing higher on Friday following the release of its quarterly update.

At the time of writing, the energy company’s shares are up 2% to $1.35.

How did Beach perform during the first quarter?

The three months ended 30 September were reasonably positive for Beach Energy.

The company’s production came in at 6.8 MMboe for the quarter, which was down 1% on the prior quarter. Management advised that higher output from Victorian Otway Basin and Cooper Basin JV was offset by lower Western Flank and BassGas volumes.

Despite this slight decline in production, Beach still delivered a 13% increase in quarterly sales revenue to $361 million compared to the prior quarter. This was driven by a 38% increase in the realised oil price, which was offset slightly by a 5% decline in the realised gas/ethane price.

At the end of the quarter, Beach had $9 million of net cash and access to $459 million in liquidity.

Beach’s Managing Director and CEO, Matt Kay, was pleased with the company’s start to the new financial year.

He commented: “In a period when the world has been anything but normal, I’m very pleased to see a great level of stability from our diverse portfolio of production assets.”

“It was a quarter in which production met expectations, demonstrating that our team can continue to operate effectively during what has been a period of high disruption – particularly in Victoria. Sales revenues were up 13%, and Beach continues to operate in a net cash position, ensuring we remain in a robust position heading into the second quarter,” Mr Kay said.

Outlook.

Beach has maintained its guidance for FY 2021. It continues to forecast production of 26 MMboe to 28.5 MMboe with a field operating cost per barrel of $8.20 to $8.75.

This is expected to lead to underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $900 million to $1,000 million for the year. Capital expenditure guidance remains unchanged at $650 million to $750 million.

More reading

• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday
• 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. 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 Beach Energy (ASX:BPT) share price pushes higher following Q1 update appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3m7ce8q

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.

Tesla (NASDAQ: TSLA) posted its latest quarterly figures after market close on Wednesday, and the shares are trading up in response.

For the company’s third quarter of fiscal 2020, revenue rose by 39% on a year-over-year basis to $8.77 billion. On the bottom line, non-GAAP (adjusted) net profit doubled and then some, to $874 million ($0.76 per share) from the year-ago result of $342 million.

Both figures came in well above analyst estimates. On average, prognosticators were modeling a far lower per-share adjusted net profit of $0.56, and they believed Tesla would only book $8.26 billion in revenue.

The company’s results were helped to no small degree by growth in vehicle deliveries that was well in the double digits. The company shipped 15,275 units of its premium Model S sedan and Model X SUV; that number was 44% higher year over year. Even better, deliveries of the comparatively inexpensive Model 3 sedan and Model Y SUV increased 55% to 124,318.

During the quarter, production in both categories also rose — dramatically, in the case of Model S/X. In Q3 the company manufactured 16,992 of these models, 169% higher than in the same period of 2019. As for Model 3/Y, that increase was 69% (to 128,044).

While the company’s battery segment remains small in relation to vehicles, it is also growing. In terms of megawatt hours of storage deployed, that business grew by 81% to 759 MWh in Q3.

In late afternoon trading on Thursday, Tesla stock was up by 1.6%, eclipsing the gains of the broader equities market.

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

More reading

• Tesla (NASDAQ:TSLA) earnings: What to watch
• 2 big challenges as Tesla (NASDAQ:TSLA) aims for a $25,000 car
• Is Tesla Inc (NASDAQ:TSLA) stock a buy ahead of earnings?
• How this fund manager is 60% UP in the year of COVID-19
• Billionaire investor says Tesla (NASDAQ:TSLA) is a $2 trillion stock

Eric Volkman 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 Tesla. 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 Tesla Q3 trounces analyst estimates 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/34k6ySn

The BlueScope Steel Limited (ASX: BSL) share price will be on watch today after the steel producer released an update on its expectations for the first half of FY 2021.

How is BlueScope performing in FY 2021?

Today’s update reveals that BlueScope has started FY 2021 in a very positive fashion following a tough end to the previous financial year.

According to the release, the company expects its underlying earnings before interest and tax (EBIT) to be approximately $340 million in the first half. This represents a 30% increase on the second half of FY 2020 and a 12.4% lift on the prior corresponding period.

The company’s Managing Director and CEO, Mark Vassella, commented: “Despite the global disruption caused by COVID-19, we’ve had a solid performance from all of our operating segments for the three months to 30 September. This is a clear demonstration of the effectiveness of BlueScope’s strategy and the resilience of our asset portfolio.”

What is driving BlueScope’s growth?

Management notes that benchmark steel spreads have improved and demand in most markets is robust.

This is being underpinned by the current strength in alterations and additions activity, demand for detached housing, rapid growth in e-commerce and logistics, and the recovery of the US automotive industry.

Management also advised that its major investment project at North Star is on track, group cash flow remains robust, and its balance sheet is in excellent condition.

Though, it has warned that there remains a lot of uncertainty in the current environment.

It notes that potential second and third COVID-19 waves could disrupt demand, supply chains, and operations, and weigh on its performance in the future. In addition to this, it warned that broader macroeconomic weakness would have the potential to dampen demand for its products.

But as things stand, management appears confident that its first half profits will be up notably over the second half of FY 2020.

More reading

• 1 ASX 200 share to buy before an effective COVID vaccine announcement
• Telstra (ASX:TLS) share price hits a multi-year low: Is it a bargain buy?
• Marley Spoon (ASX:MMM) share price in a trading halt after explosive Q3 growth
• 2 must-buy ASX dividend shares for income investors to snap up
• 5 things to watch on the ASX 200 on Friday

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 BlueScope Steel (ASX:BSL) share price on watch after first half profit guidance appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/37tZrZP

The whole world is waiting on an effective COVID vaccine. But if and when a proven vaccine arrives, the Flight Centre Travel Group Ltd (ASX: FLT) share price likely won’t be the bargain it is today.

Like most travel related shares – such as Webjet Limited (ASX: WEB) and Sydney Airport Holdings Pty Ltd (ASX: SYD) – Flight Centre’s share price was particularly hard hit from the fallout of the coronavirus.

From 21 February through to 19 March shares tumbled 75%. Flight Centre’s share price is up 52% since that low, but remains down 66% year-to-date.

By comparison the S&P/ASX 200 Index (ASX: XJO) is down 8% in 2020.

What does Flight Centre Travel Group do?

Flight Centre is one of the world’s largest travel agency groups. Its company-owned operations span more than 23 countries and its corporate travel management network covers more than 90 countries.

The company has a broad range of brands across its corporate, leisure and destination segments. These include Student Flights, Travel Money Oz, Corporate Traveller and Topdeck.

Flight Centre shares first began trading on the ASX in 1995.

Why buy shares in Flight Centre before a vaccine is proven?

As Benjamin Franklin famously quipped, “In this world, nothing is certain except death and taxes.”

So too, we can’t be certain that the world’s scientists will produce a highly effective vaccine to squash COVID-19 from our lives. But there are tremendous incentives for the leading pharmaceutical companies to do so. And they’re backed by unprecedented funding, cutting edge technology, and some of the best minds in the world.

So, while nothing is certain, I believe we’ll see a series of vaccines rolled out over the coming 12–24 months. The initial ones may only be 50% effective, as some clinical trials are already reporting. That’s a big step in the right direction, but not enough to reopen global travel. Or rejuvenate Flight Centre’s revenues and share price to early 2020 levels.

However, with time, the results will almost certainly improve. Remember, this global race for an effective vaccine only kicked off 7 months ago.

But the vast majority of investors don’t look ahead 2 or more years. They wait until good news is locked in and then invest, along with everyone else.

In this case the good news is a proven vaccine. And that news will likely trickle out over a period of months as it progresses through various trials. And with each new successful announcement leading ASX travel and leisure shares are likely to see renewed investor interest. Which is why, by the time such a vaccine is approved and in mass production, the biggest gains to be had from these shares will already be history.

As mentioned up top, Flight Centre’s share price is still down 66% from 2 January’s $39.52 per share. In my opinion, there’s no reason shares couldn’t be trading for $39.52 again once air travel returns to its pre-pandemic levels.

If they do, that would represent a 190% share price gain from yesterday’s closing price of $13.61. Should that eventuate, I imagine that’s worth waiting a few years for things to play out.

More reading

• 5 things to watch on the ASX 200 on Friday
• Webjet (ASX:WEB) share price on watch after FY 2021 trading update
• 5 things to watch on the ASX 200 on Thursday
• How has COVID-19 shaken up the Sydney Airport share price?
• 3 ASX shares I’d buy for summer 2021

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group 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 1 ASX 200 share to buy before an effective COVID vaccine announcement appeared first on Motley Fool Australia.

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

The Telstra Corporation Ltd (ASX: TLS) share price was out of form again on Thursday and dropped lower again.

The telco giant’s shares fell 1.5% to a new multi-year low of $2.75.

This latest decline means that the Telstra share price is now down a disappointing 23% since the start of the year.

Is this a buying opportunity?

I think the weakness in the Telstra share price is a buying opportunity for investors.

Based on its guidance for FY 2021, the company’s shares are changing hands for 19x forward earnings.

I think this is good value, particularly in comparison to TPG Telecom Ltd (ASX: TPG) shares, which are trading at over 40x estimated FY 2021 earnings.

The dividend.

Another reason I would buy Telstra’s shares is its dividend.

Although there have been a lot of questions over the sustainability of its 16 cents per share fully franked dividend, the company’s board recently revealed that it would be willing to adjust its dividend policy to maintain this dividend.

It will do this if it believes $7.5 billion to $8.5 billion of operating earnings is achievable in an NBN world, its free cash flow remains supportive, and its financial position remains strong.

Essentially, the Telstra board doesn’t want to maintain it this year if will only have to cut it the year after.

The good news is that I believe these conditions will be met thanks to its T22 strategy and the easing NBN headwind.

If this proves to be the case, Telstra’s shares will provide investors with a 5.8% fully franked dividend yield in FY 2021. I think this is very attractive in the current environment.

Goldman Sachs’ buy rating.

I’m not the only one that sees the Telstra share price weakness as a buying opportunity.

Earlier this month, analysts at Goldman Sachs retained their buy rating and $3.60 price target on the company’s shares.

This price target implies potential upside of 31% excluding dividends and almost 37% including them.

More reading

• 2 of the best ASX 50 shares you could buy right now
• 3 super reasons to buy ASX 200 shares today
• Is the Telstra (ASX:TLS) share price undervalued?
• How to tell if an ASX share is a bargain or a dog
• 3 high quality blue chip ASX shares to buy now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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 Telstra (ASX:TLS) share price hits a multi-year low: Is it a bargain buy? appeared first on Motley Fool Australia.

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

The Marley Spoon AG (ASX: MMM) share price won’t be going anywhere on Friday after the subscription-based meal kit provider requested a trading halt following the release of its third quarter update.

What happened in the third quarter?

Marley Spoon’s positive form continued in the third quarter, with very strong growth being delivered across all geographic regions.

Management notes that it experienced continued strong demand for its meal-kits from new and existing customers, leading to positive growth momentum and favourable customer acquisition costs,

According to the release, for the three months ended 30 September, Marley Spoon achieved revenue of 69.3 million euros, up 109% on the prior corresponding period.

The company’s US operations were strongest, delivering revenue of 34.2 million euros, up 163% in constant currency terms. This was driven by strong growth in Martha & Marley Spoon and Dinnerly brands. It achieved third quarter earnings before interest, tax, depreciation and amortisation (EBITDA) of 0.7 million euros.

Growth was also very strong in Australia, with revenue rising 84% to 25.3 million euros. Operating EBITDA was 3.4 million euros for the quarter.

Finally, in Europe, the company recorded an 83% increase in revenue to 9.8 million euros. Though, unlike the US and Australia, these operations are not yet profitable and posted an EBITDA loss of 0.6 million euros.

Marley Spoon ended the quarter with 362,000 active customers, up 86% year on year. However, this is just a 3% increase quarter on quarter. Also, on average it generated 4.3 orders per customer in the quarter. While this was up from 3.9 orders per customer in the prior corresponding period, it was down from 4.4 in the second quarter.

Looking ahead, Marley Spoon has narrowed its FY 2020 revenue guidance range. It now expects growth of between 90% to 100% year on year, compared to 80% to 100% previously.

Why are Marley Spoon shares in a trading halt?

Marley Spoon requested a trading halt whilst it undertakes a A$56 million fully underwritten placement.

The company is raising the funds at $3.22 per share, which represents a 7.7% discount to its last close price.

Management commented: “Given the continued traction in online meal kit adoption and strong recent business performance, Marley Spoon considers it appropriate to improve its balance sheet and access additional growth capital. With additional balance sheet flexibility, Marley Spoon will be well positioned to accelerate its global growth strategy and capitalise on the opportunities available in its core markets.”

More reading

• Up 900% this year, can the Marley Spoon (ASX:MMM) share price continue to climb?

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 Marley Spoon (ASX:MMM) share price in a trading halt after explosive Q3 growth appeared first on Motley Fool Australia.

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