Tag: Motley Fool

The S&P/ASX 200 Index (Index:^AXJO) is holding up well during this month’s reporting season. But some popular stocks are starting to look overstretched and have been slapped with broker downgrades.

This doesn’t take anything away from the fact that profit results have been more resilient to COVID-19 than originally anticipated.

But the results don’t necessarily justify current valuations, especially in cases where some ASX stocks are breaking record highs.

Downshifting a gear

One stock that zoomed to new highs is the Carsales.Com Ltd (ASX: CAR) share price. Shares in the online auto classifieds group jumped 2% to $20.64 in late afternoon trade following its better than expected result.

But Morgans thinks now is the time to cut its recommendation on Carsales to “hold” from “add”.

Silver lining couldn’t ward off a downgrade

This is despite the fact that COVID-19 was not all bad news for the Carsales. While coronavirus made a big dent in the group’s bottom line, it may have perversely helped defer a structural headwind for Carsales.

Consumers were moving away from car ownership before the crisis but may now be dissuaded from using public transport.

“Covid has also given greater impetus to the consumers move to research and transact for cars online, which obviously plays directly into CARs wheelhouse,” said Morgans.

Nonetheless, with the stock currently trading above the broker’s upgraded price target of $19.17 (previously $14.58), Morgans was left little choice but to take it off its buy list.

Tasting a little too rich

Another stock that jumped to a record high is the Domino’s Pizza Enterprises Ltd. (ASX: DMP) share price.

Shares in the fast food chain jumped 2.8% to $86.02 at the time of writing and Goldman Sachs thinks its starting to look a little overcooked.

The broker downgraded its recommendation on Domino’s to “neutral” from “buy” even as the company delivered a decent profit result.

COVID skews results

While Domino’s earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 73% was a little under the broker’s estimates, it included $10.9 million in COVID store support.

Adjusting for this, EBITDA would be slightly ahead instead.

“Same store sales accelerated in 4Q20 to 12% (4.8% 3Q20) and have continued at 11% into 1Q21,” said the broker.

“In our view, the growth pipeline in each region remains solid. Operational execution continues to be strong, especially in Japan and Germany.”

However, the good news is already baked into the price. Goldman’s price target on Domino’s is $82.80 a share.

Not enough good news

Meanwhile, Credit Suisse lowered its rating on the WiseTech Global Ltd (ASX: WTC) share price to “neutral” from “outperform”.

The move comes after the logistics technology group delivered a 17% increase in FY20 EBITDA to $127 million, which is 6% ahead of the broker’s expectations.

“We found the result incrementally supportive of our long-term positive view on the opportunity,” said Credit Suisse.

“That said, we struggle to bridge the very strong share price performance with the new news in the result, particularly given the stronger-than-expected FY21 earnings guidance was partly supported by increased R&D capitalization.”

The broker’s 12-month price target on WiseTech is $28 a share. The stock fell 1.7% to $27.40 on Thursday.

More reading

• Is now a good time to buy Fortescue shares?
• COVID-19 panic: SMSFs fled shares, then missed market rally
• ASX 200 down 1%: Qantas results, Afterpay hits record high, Webjet crashes lower
• Sonic share price surges to record high as its profit results defy sceptics
• Why it may not be too late to chase ASX reporting season record breakers

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of WiseTech Global. The Motley Fool Australia has recommended carsales.com Limited and 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.

The post The latest ASX 200 stocks hit by broker downgrades appeared first on Motley Fool Australia.

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

The Westpac Banking Corp (ASX: WBC) share price was sliding slightly today after the bank formally acknowledged the start of civil proceedings against it.

The issue relates to fees for no service uncovered by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

ASIC proceedings

The Australian Securities and Investments Commission (ASIC) has launched the civil proceedings against two entities within the Westpac group: BT Funds Management Limited and Asgard Capital Management. 

Allegations concern the inadvertent charge of financial adviser fees to 404 bank customers totalling $130,006, after a request had been made to remove the financial adviser from the customer accounts. The two Westpac entities accept the allegations and do not intend to defend the proceedings. However, the entities will make submissions regarding the appropriate penalty.

Additionally, BT Funds and Asgard Capital Management will make submissions on the penalty and will work with the regulator to resolve the proceedings as quickly as possible. 

Westpac self-reported the issue to ASIC in July 2017, and customers have been contacted and remediated.  

June quarter update

The proceedings follow Westpac’s decision to suspend its dividend earlier this week after its June quarter results.

It announced unaudited statutory net profit of $1.12 billion and cash earnings of $1.32 billion.

Net interest margin was down 8bps including notable notable items to 2.05% driven by low interest rates. 

Westpac increased its impairment charge to $826 million to cover potential losses induced by the coronavirus pandemic. 

Additionally,  its common equity, tier 1 ratio remains unchanged at 10.80%.

78,000 mortgages worth $30 billion are currently in deferral which is down from 135,000 mortgages worth $51 billion. Following the three month check-in, around half are expected to return to making payments.

What does this mean moving forward?

Given these uncertain times, it’s difficult to predict what the near future holds for the Westpac share price.

Westpac Group CEO Peter King said the bank had maintained its strong balance sheet and increased provisions for bad debts to support a “prudent approach” to managing impairments.

“While there have been some signs that the economy is performing better than early expectations, significant uncertainty remains, particularly given the unpredictability of COVID-19 outbreaks and their local impacts,” he said.

Westpac continues to offer its customers deferral support where needed and follow-up in periodic check-ins. 

The Westpac share price was down 1.26% to $17.18 in late afternoon trade today.

More reading

• Which ASX bank share is the best buy for dividend income?
• Is the Westpac share price a buy for future dividends?
• Top brokers name 3 ASX 200 shares to buy today
• What you need to know about the ANZ share price and profit result today
• ASX 200 rises 0.8%, Treasury Wine Estate shares turn sour

Motley Fool contributor Matthew Donald 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 Westpac share price is on the slide today. Here’s why appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Q8bTEL

The HT&E Ltd (ASX: HT1) share price is soaring 16.18% at time of writing following the release of the company’s half-year results. 

Half-year results

Despite advertising spend in both Australia and Hong Kong declining significantly due to the impacts of the coronavirus pandemic on the company’s operations, the HT&E share price has rallied today.

The media and entertainment company reported that revenue was down 29% to $93 million compared to $130.9 million in the prior corresponding period (pcp). 

Additionally, earnings before interest, taxation, depreciation and amortisation (EBITDA) were down 49% to $19.5 million compared to $38.1 million in the pcp.

Underlying earnings per share, excluding exceptional items and discontinued operations, were down 86% to 0.9 cents per share from 6.3 cents per share in the pcp. Exceptional items included the Jobkeeper government subsidy.

The company also advised it is facing an ATO branch matter, but stated it remains confident in its position and will pursue the matter fully through to litigation. 

HT&E reports that radio audiences have remained engaged with commercial radio reaching a record high to over 11 million people weekly. Listening in the home has replaced listening in the car through the use of smart speakers.

Management comments

Commenting on the results, HT&E chair Hamish McLennan said:

The fundamentals remain strong with the underlying business making a profit for the half and maintaining an industry leading balance sheet with $90 million of cash reserves and $251 million of undrawn debt, providing HT&E with flexibility and alternatives for growth.

[Australia Radio Network] is weathering the storm, with overall radio listenership increasing, and streaming and digital audio consumption growing. Our clear commercial strategy, together with great talent integration is winning share and our Q3 and forward bookings are showing improved momentum.

Trading update

In the Australia Radio Network segment, trading in July has improved and finished an estimated 27% down for the month, an improvement on the 46% drop in the June quarter. August and September are tracking similar to July. HT&E said this could improve further in Q4 if current restrictions in Melbourne are moderate and aren’t tightened elsewhere.

Additionally, HT&E advises that impacts from the coronavirus pandemic are continuing into Q3. It expects category spend in the Hong Kong outdoor segment could continue, provided restrictions lift and there is an absence of protest activity.

Furthermore, the company reported it remains on track to deliver total temporary operating cost savings in 2020 of $11 million–$14 million, before the current Jobkeeper subsidy benefit of approximately $9 million.

At the time of writing, the HT&E share price is up by 16.18%, trading for $1.40 per share.

More reading

• 2 ASX ETFs I would buy for growth and income
• Is the CSL share price a buy?
• Integrated Research share price falls 13% on FY 2020 earnings
• The latest ASX 200 stocks hit by broker downgrades
• The Westpac share price is on the slide today. Here’s why

Motley Fool contributor Matthew Donald 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 HT&E share price jumps 16% on half year results, despite COVID-19 impact appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/32bQDDB

The worst performer on the S&P/ASX 200 Index (ASX: XJO) on Thursday was the Webjet Limited (ASX: WEB) share price.

The online travel agent’s shares finished the day with a decline of 12% to $3.24.

Why did the Webjet share price crash lower?

Investors were selling Webjet’s shares on Thursday following the release of its full year results for FY 2020.

The 12 months ended 30 June 2020 really were a tale of two halves for Webjet. The first half saw the company deliver record sales and profits and then the second half saw this wiped out in an instant because of the pandemic.

For example, in FY 2020 Webjet reported a 27% decline in revenue to $266.1 million. This might not seem like the worst sales result, but it’s when you dig deeper that the full impact of the pandemic can be seen.

Webjet’s first half revenue came to $217.8 million, which represents a massive 81.8% of its revenue for the year. Just $48.3 million of revenue was generated in the second half. And it’s worth remembering that travel markets weren’t truly disrupted until late February early March.

Unfortunately, things were much worse for its earnings. Webjet’s earnings before interest, tax, depreciation and amortisation (EBITDA) came in at a loss of $91.3 million for the year. That’s despite the company posting positive EBITDA of $46.4 million in the first half.

Admittedly, this statutory result includes a number of significant one-offs that should not repeat in FY 2021. But even if you exclude them, Webjet’s EBITDA fell 80% to $26.4 million. This comprises first half EBITDA of $86.3 million and a second half EBITDA loss of $59.9 million.

The good news for shareholders is that its operating costs have now been reduced materially. On its analysts call, management stated that its cost base is now ~$11.6 million per month. Annualised this comes to just under $140 million.

The big question is, how long will it take for Webjet to be generating revenue above $140 million to breakeven? Given its exposure to the domestic leisure market and the ongoing border restrictions, I feel it is unlikely to be profitable in FY 2021.

Should you invest?

In light of the above, I wouldn’t be in a rush to invest. Especially given its market capitalisation of $1.1 billion.

This market capitalisation means Webjet would have to be making a profit after tax of $55 million to be trading on a PE ratio of 20. I don’t see that happening any time soon unfortunately.

More reading

• Top brokers name 3 ASX shares to sell today
• Why CSL, Iress, Santos, & Webjet shares are dropping lower
• ASX 200 down 1%: Qantas results, Afterpay hits record high, Webjet crashes lower
• 5 things to watch on the ASX 200 on Thursday
• Webjet share price on watch after reporting $143.6 million loss

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet 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 Webjet share price crashes 12% lower: Is it time to buy? appeared first on Motley Fool Australia.

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

Iron ore miner Fortescue Metals Group Limited (ASX: FMG) has been on a record run over recent times. Last week, the Fortescue share price reached an all-time high of $18.92.

In late afternoon trade, Fortescue shares are down 1.43% to $17.90 along with the S&P/ASX 200 Index (ASX: XJO), which has fallen 0.9% to 6,113.5 points at the time of writing.

With the iron ore spot price sitting at US$125.50 a tonne (at the time of writing) and the company’s FY20 results to be released next week, is now the best time to snap up Fortescue shares?

Fortescue at a glance

One of the world’s largest iron ore producers, Fortescue has grown from a small mining outfit to an important player in the industry. Fortescue’s core assets are located in the Pilbara region of Western Australia.

The company mines a lower iron ore grade content than its rivals BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO). At 62% Fe, Fortescue is able to seize on China’s sizeable demand for the product through a discounted rate below the benchmark price.

Q4 FY20 snapshot

Fortescue updated the market at the end of July with its quarterly production report. The mining giant highlighted record iron ore shipments of 47.3 million tonnes for Q4 and 178.2 million tonnes in the past year.

C1 costs for Q4 were US$13.02 per wet metric tonne (wmt). Though this was slightly higher than the past 3 quarters at US$12.94/wmt, additional costs were impacted by COVID-19 measures taken.

Fortescue now boasts the industry’s leading cost position and is on track for another bumper year as Chinese steel mills have been outstripping global iron ore supply.

Fortescue’s balance sheet remains healthy with cash on hand of US$4.9 billion, a $700 million increase from Q3. Net debt was US$300 million.

FY21 guidance

As Fortescue prepares to release its full-year earnings on 24 August, iron ore shipments are expected to be in the range of 175–180 million tonnes and C1 costs of US$13–US$13.50/wmt, based on the assumed Australian dollar exchange rate of $0.70.

Speculation has been rising that shareholders could be rewarded with record dividends as Fortescue has been capitalising on its strong output and the recent high price of iron ore.

The spot price for iron ore has increased 44.25% over the past 12 months.

It is estimated that dividends will be paid out close to $1 for every Fortescue share held. That represents an annual yield of 9.8% for investors – including the 76 cents per share dividend declared earlier this year.

Should you invest?

I think that the Fortescue share price is an interesting one to watch. It’s been a near perfect ride for the company. It was only back in February 2016 that the Fortescue share price was trading as low as $1.62. Long-term buy-and-hold investors would be grinning with delight.

Should its FY20 results exceed market expectations, I am confident the Fortescue share price will continue its meteoric rise.

Although iron ore demand and spot price will fluctuate, I would be happy being a buyer today to hold for the next 10 years.

More reading

• The latest ASX 200 stocks hit by broker downgrades
• COVID-19 panic: SMSFs fled shares, then missed market rally
• ASX 200 down 1%: Qantas results, Afterpay hits record high, Webjet crashes lower
• Sonic share price surges to record high as its profit results defy sceptics
• Why it may not be too late to chase ASX reporting season record breakers

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.

The post Is now a good time to buy Fortescue shares? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3aF3pOG

The Over The Wire Holdings Ltd (ASX: OTW) share price is pushing higher on Thursday following the release of its full year results.

In afternoon trade the telecommunications, cloud, and IT solutions provider’s shares are up over 2% to $4.23.

How did Over The Wire perform in FY 2020?

Over The Wire was a solid performer in FY 2020 and achieved growth across its entire business.

For the 12 months ended 30 June 2020, the company posted revenue of $87.6 million, up 10% on the prior corresponding period. The main drivers of its growth were the Voice and Service & Security segments.

The Voice segment recorded a 19% increase in revenue to $19.6 million and the Service & Security segment also delivered 19% revenue growth to $20.3 million. This was supported by a 12% lift in Hosting revenue to $10.1 million. The laggard in the group was its key Data Networks segment, which recorded a modest 2% rise in revenue to $37.5 million.

However, due largely to a 13% increase in overhead expenses, the company’s earnings before interest, tax, depreciation and amortisation (EBITDA) grew at a slower rate of 1% to $17.4 million. Though, it is worth noting that this was slightly ahead of the market consensus estimate.

Finally, on the bottom line, Over The Wire’s NPATA fell 2% or $0.1 million year on year to $8.8 million.

Challenging market conditions.

Over The Wire’s Managing Director, Michael Omeros, was pleased with the company’s performance in challenging market conditions.

He said: “In challenging market conditions impacted by COVID-19 restrictions, our team has shown commendable focus and resilience. We are delighted to deliver a full year result that exceeds the profitability expectation outlined in our May 2020 Business Update, and an exceptional customer retention rate of 98.5%.”

“Our three solution pillars Cloud. Connect. Collaborate. are benefitting from industry tailwinds and our investment in capability and systems over the last twelve months positions us well to take advantage of these. We are excited by the potential opportunities for organic growth complemented with quality strategic acquisitions that accelerate the delivery of our strategy,” he added.

Outlook.

No guidance was given for FY 2021, but management made a few comments on how the business is performing.

It commented: “Our business performance is tracking well against our strategy and we continue to generate positive operational cash flow and maintain a strong balance sheet. We will continue to proactively support our customers and remain well positioned to continue to deliver organic growth and pursue further accretive acquisitions. The Company remains confident that it will achieve solid growth in FY21 and continue to deliver value for shareholders.”

More reading

• Where to hunt for ASX dividend share income in 2020
• Why is the Redbubble share price up 38% in August?
• Codan share price soars 16% thanks to record sales
• Is the ANZ share price a buy?
• Top brokers name 3 ASX shares to sell today

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 Over The Wire Holdings Ltd. The Motley Fool Australia has recommended Over The Wire 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 Over The Wire share price pushes higher on FY 2020 results appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3gdj1u6

The August earnings season has delivered many surprises – some good and some bad. But as an investor who likes to hunt for dividend income myself, what has really stood out for me right now is the dearth of robust dividend income stemming from the ASX. The coronavirus pandemic has plenty to answer for.

We already knew the ASX banks were in trouble in 2020. But now, we know that Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking GrpLtd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) will pay dividend yields so low that investors might have thought it was a joke if you had told them last year.

I never thought I’d see the day where ANZ boasts a forward, annualised dividend yield of 2.73% (based on the company’s recently-announced 25 cents per share dividend). And Westpac Banking Corp (ASX: WBC) isn’t paying an interim dividend at all.

It’s not just the ASX banks though.

Income carnage on the ASX

Ramsay Health Care Limited (ASX: RHC), a company that used to hold a 20-year streak of increasing its dividends annually, ran dry this year and broke its streak. Just this morning, Medibank Private Ltd (ASX: MPL) announced that its track record of increasing dividends would also end with a trim. This is a track record Medibank has maintained since floating back in 2014.

Mining giants like BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) have also cut their payouts in 2020, despite record iron ore prices.

And former ‘defensive’ companies like Transurban Group (ASX: TCL), Sydney Airport Holdings Pty Ltd (ASX: SYD) and Coca Cola Amatil Ltd (ASX: CCL) haven’t escaped the ravages of COVID-19. All of these companies have slashed their payouts in 2020. Sydney Airport probably won’t be paying a dividend at all this year.

Even utilities (which supposedly benefit from their ‘inelastic’ energy services) like AGL Energy Limited (ASX: AGL) and Origin Energy Ltd (ASX: ORG) haven’t been spared. Origin also announced a dividend trim this morning. AGL has bravely maintained its dividend but admits it will be paying out around 100% of its earnings in the coming years to fund it.

Where should investors turn for ASX dividend income?

It’s a tough time for ASX dividend investors, no doubt. Many investors, such as retirees, rely on regular payments from their shares to fund their lifestyles. So where should these investors turn in this Brave New World?

My recommendation is to look for companies with a reasonable chance of maintaining or even growing their dividends in 2020 as a start. Washington H. Soul Pattinson & Co Ltd (ASX: SOL), Brickworks Limited (ASX: BKW), Coles Group Ltd (ASX: COL) and APA Group (ASX: APA) come to mind.

You can also look to managed investments as an alternative as well. Income-focused exchange-traded funds (ETFs) are a route you could explore. For example, the Vanguard Australian Shares High Yield ETF (ASX: VHY) is specifically purposed to maximise potential income by holding a liquid basket of dividend-paying shares. It has already reduced its exposure to the ASX banks in 2020, and is instead piling into BHP, Wesfarmers Ltd (ASX: WES) and Telstra Corporation Ltd (ASX: TLS).

Other than ETFs, there is a bevvy of Listed Investment Companies (LICs) that focus on income. Australian Foundation Investment Co Ltd (ASX: AFI) and Argo Investments Limited (ASX: ARG) are 2 options that have held payouts at reasonably steady levels. WAM Research Limited (ASX: WAX) is another LIC I like for dividend income. It has a current trailing yield of 6.96%, which comes fully franked. This LIC also has enough profits in reserve to fund this dividend for at least a couple of years.

Foolish takeaway

It’s a tough time to be an ASX dividend investor to be sure, perhaps more than any other time in living memory. Still, there are yields to be found if you know where to look. And I wouldn’t start with the familiar names. 2020 has certainly changed the income game.

More reading

• ACCC nod for Metcash acquisition of Total Tools
• Why it may not be too late to chase ASX reporting season record breakers
• Wesfarmers share price on watch after cautious outlook overshadows strong FY 2020 result
• 3 Warren Buffett ASX dividend shares you can buy right now
• A LIT time: LITs, LICs prove popular with ASX investors

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited, Ramsay Health Care Limited, Telstra Limited, Vanguard Australian Shares High Yield Etf, WAM Research Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group, Transurban Group, and Wesfarmers Limited. The Motley Fool Australia has recommended Ramsay Health Care 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 Where to hunt for ASX dividend share income in 2020 appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Yl1bPI

The Redbubble Ltd (ASX: RBL) share price is on a tear this month, up 38% so far in August. Year-to-date, the Redbubble share price is up an eye-popping 231%.

To put that in perspective, the All Ordinaries Index (ASX: XAO) has gained 3.4% in August and is down 8.0% for the calendar year.

Although well-positioned as an online retailer, Redbubble’s share price was smashed during the COVID-19 driven panic selling, falling 61% from 21 February through 23 March.

Redbubble’s share price rebound since then has been nothing short of epic, with the share price up 684% since the March low. Investors with the nerves (and luck) to buy shares on 23 March would have seen a $1,000 investment balloon to $7,840 today. Minus any brokerage fees, of course.

At the current price of $3.61 per share, Redbubble has a market cap of $951 million.

What does Redbubble do?

Redbubble incorporates 2 global online market places, Redbubble.com and TeePublic.com. The company sells a wide range of products including apparel, stationery, housewares, bags, wall art and in recent months, more importantly face masks.

The company was founded in Melbourne in 2006 to help artists profit from their creations. Artists can upload their designs and products, and customers can search for and purchase these products which are produced to order and shipped around the world. Today, the company is connected to over 700,000 artists and designers across the planet

Redbubble began trading on the ASX in 2016.

Why is the Redbubble share price soaring?

In the age of pandemic-driven lockdowns, Redbubble finds itself in the enviable position of running an online retail platform. Atop that the company has been quick to transition into selling uniquely styled face masks as demand for masks has grown exponentially.

In a 7 August business update, the company reported its July marketplace revenue leapt 132%, to reach $49 million. It also announced its fourth quarter 2020 market place revenue increased 107%, to $122 million.

Redbubble noted that the shift to online shopping at seen growth in all its core products and markets. Additionally, face masks added $26 million to revenue from their launch in April through the end of July.

Redbubble releases its full FY20 results tomorrow. Investors appear to be forecasting good results, as the Redbubble share price is up more than 9% in late afternoon trading.

More reading

• Why Coca-Cola Amatil, REA Group, Redbubble, & Sezzle shares are storming higher
• Redbubble share price on watch after COVID face mask demand drives sales surge
• Why the Redbubble share price is trading higher today
• Why 5G Networks and these ASX shares just hit record highs
• These ASX eCommerce shares are riding the online shopping wave

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 Why is the Redbubble share price up 38% in August? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3l8MtVR

The Codan Limited (ASX: CDA) share price has today jumped following an impressive full year report. The Codan share price has risen 16.14% on the news to $10.43 at the time of writing.

FY 2020 highlights

Codan reported that it has delivered the highest full year profit in the info tech company’s history. Net profit after Tax (NPAT) was disclosed as $64 million, a huge 40% increase on last year’s result.

Driving this record profit was impressive growth in sales for the company, up to $348 million. Codan achieved a 29% growth in sales compared to FY 19. This growth was mainly driven by the company’s metal detection and communications segments which make up 68% and 30% respectively of Codan’s sales. The huge surge in gold mining indirectly aided the company as it saw a 42% increase in its metal detection services for use in the sector.

Codan now boasts customers in over 150 countries to which it exports around 90% of its sales, representing impressive diversification. The company derived $161 million of its sales from Africa which remains its largest contributor.

As mentioned above, the largest segment of Codan’s business is metal detection. The company invested in excess of $30 million over the year and, as such, has five key products currently under development. These products are expected to be released throughout FY 21.

In terms of the company’s cash generation, Codan generated $78 million in free cash flow for the year. This contributed to its strong balance sheet of $93 million in net cash. However, Codan noted that it does have a large FY 20 tax bill to be payed in the first half of FY 21.

Strong dividend

As a result of Codan’s strong performance, the company was able to report a final dividend of 11 cents per share. Codan’s increasing dividend reflects the growing strength of the business and takes its annual dividend to 18.5 cents. The Codan board maintains its commitment to paying 50% of profits as dividends.

Outlook for Codan

Thanks to a number of strategic initiatives, Codan appears poised to deliver a decent year in FY21. Nevertheless, the board declined to provide an outlook for FY 21, stating that a further update will be given at the annual general meeting. The board also maintained that Codan is well positioned for a strong start to the year. The Minelab product will likely benefit from a full year of Vanquish sales and the release of a new gold detector. Minetec is also expected to return to profitability for the company.

More reading

• Why Afterpay, Codan, IDP Education, & Sonic shares are charging higher
• Why Kogan and these ASX shares just hit record highs

Motley Fool contributor Daniel Ewing 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 Codan share price soars 16% thanks to record sales appeared first on Motley Fool Australia.

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

Is the Australia and New Zealand Banking Group (ASX: ANZ) share price a buy after the major ASX bank released its FY20 third quarter update?

I can’t remember being as interested in an ANZ third quarter update as the one that it just released.

What was in the update?

ANZ reported that its FY20 third quarter saw $1.33 billion of statutory profit generated, compared to the FY20 first half quarterly average of $773 million.

Continuing operations cash profit was $1.5 billion, up from the FY20 first half quarterly average of $707 million.

Continuing operations cash profit excluding notable items was $1.6 billion, up from the FY20 first half quarterly average of $1.23 billion.

Firstly, it’s good to see that ANZ is still generating a decent amount of profit even during this difficult period. I think that’s one of the main reasons that the ANZ share price has held up as much as it has.

ANZ’s credit quality is key during this period. In the first half of FY20 ANZ recognised a total provision charge of $1.67 billion. In the third quarter ANZ recognised a further $500 million credit provision.

Higher credit provisions is a drag on profit. Bad debts have been lower for years as interest rates come down and property prices rise. I think the ASX banks like ANZ might be facing higher bad debt charges for a number of years. It takes a while for houses to go through the bad debt process and for them to be eventually sold. 

In terms of the common equity tier 1 (CET1) ratio it was 11.1% at 30 June 2020. The pro forma CET1 ratio was 11.3% after adjusting for the conversion of New Zealand capital notes in 2022 and the announced sale of UDC to Shinsei Bank Limited. That’s a pretty good capital position to be in at this stage. A stronger balance sheet is good for the ANZ share price.

COVID-19 has been impacting the economy for several months already. But ANZ remains in a solid position.

ANZ also said that its home loan growth has been faster than the market whilst it has also seen strong deposit growth.

ANZ dividend

The ANZ board announced a 2020 interim dividend of $0.25 per share, fully franked. It will have NZ$0.03 cents of imputation credits for New Zealand investors.

The decision was made after considering ANZ’s continuing capital strength with the latest APRA dividend guidance, whilst taking into account shareholder needs for income with the uncertain future impact of COVID-19.

ANZ said that the interim dividend represents 46% of its FY20 first half profit, or 30% of the FY20 first half once the impairment for Asian associates at 31 March 2020 is excluded. The impairment didn’t impact capital.

Is the ANZ share price a buy?

ANZ is seeing a rising amount of home loans that are more than 90 days overdue. Will the economy be able to recover before ANZ decides that these loans have been unpaid for too long?

In Australia there are around 84,000 deferrals in place for home loan accounts at 31 July 2020 valued at $31 billion, being 9% of its Australian home loan accounts. There are also 22,000 business loans at 31 July 2020 valued at $9.5 billion, representing 14% of commercial lending exposures.

I think FY21 could be difficult for ANZ. Plenty of sectors are still troubled including travel, tourism and so on.

If the economy can bounce back in FY22 then maybe ANZ is trading cheaply, perhaps on a high single digit forward p/e ratio. The ANZ share price won’t fully recover until it seems as though the ANZ earnings are on track to fully recover.

The RBA interest rate is likely to stay lower for at least a few years, which is likely to hamper ANZ’s net interest margin (NIM). For that reason and the current difficult conditions, there are plenty of other ASX shares I’d buy first.

More reading

• Which ASX bank share is the best buy for dividend income?
• ASX 200 up 0.8%: ANZ to pay dividend, a2 Milk tumbles, CSL impresses
• What you need to know about the ANZ share price and profit result today
• Take a look at last week’s worst performing ASX shares
• Take a look at last week’s best performing ASX shares

Motley Fool contributor Tristan Harrison 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 ANZ share price a buy? appeared first on Motley Fool Australia.

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