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

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:

Altium Limited (ASX: ALU)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $40.00 price target on this electronic design company’s shares following its full year results. The broker notes that its revenue guidance for FY 2021 was short of expectations, but its EBITDA guidance was in line with its estimates. The broker was also pleased to see management reiterate its goal of growing revenue to US$500 million with 100,000 subscriptions. I agree with Morgan Stanley and feel Altium is a great long term option.

Coles Group Ltd (ASX: COL)

Analysts at Goldman Sachs have retained their buy rating and $20.00 price target on this supermarket giant’s shares. According to the note, Coles delivered a full year result which was largely in line with its expectations. The broker also notes that trading in FY 2021 has started positively. Particularly with its online sales growth. Another positive was that its margin contraction was lower than the broker expected. I think Goldman Sachs is spot on with Coles and would be a buyer of its shares.

Westpac Banking Corp (ASX: WBC)

Another note out of Goldman Sachs reveals that its analysts have retained their buy rating but trimmed their price target on this banking giant’s shares slightly to $19.83. According to the note, Goldman was pleased with the headway the bank is making on mortgage deferrals and feels its balance sheet is strong. In addition to this, Goldman estimates that Westpac’s shares offer a ~6% FY 2021 dividend yield at the current level. This means its shares offer a very compelling potential total return over the next 12 months. I would agree with the broker on this one too and feel Westpac could be a good option for patient investors.

More reading

• Can the US election impact the ASX? You bet!
• Nearmap share price slides 13% on release of financial results
• ASX 200 up 0.8%: ANZ to pay dividend, a2 Milk tumbles, CSL impresses
• What if a Covid-19 vaccine never comes?
• The latest ASX stocks upgraded by brokers to “buy” today

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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 Invocare Limited (ASX: IVC) share price edged as much as 2% higher in early trade after the funeral home operator released its half-year results for FY2020. The Invocare share price has since dropped to $9.86 per share at the time of writing, down 1.40% for the day.

How did Invocare perform?

Notwithstanding the difficulties posed by COVID-19 restrictions on funeral attendances specifically, Invocare’s performance was largely resilient in the circumstances. In particular, the government-imposed restrictions of funeral attendance numbers was cited as “the key driver in declining revenue”.  

Invocare’s revenue declined by 6.2% overall between the January and June period, operating earnings before interest, taxes, depreciation and amortisation (EBITDA) were down in the order of 22.7% and net profits after tax were down by as much as 143% compared to 2019 half-year levels.

Despite these underwhelming results, the company is seeing customer preferences return to pre-COVID trends since restrictions have eased, with higher attendances expected to drive earnings uplift for the second half of 2020.

The company will pay out to shareholders its previously deferred dividend of 23.5 cents, as well as a 5.5 cent interim dividend on 5 October.

In commenting on the results and Invocare’s ability to respond to a challenging environment, CEO Martin Earp added: “Innovative new services, capital raising, debt refinancing, new operational procedures to safeguard the safety of our staff and our client families are all clear examples of a business that has responded in an agile manner to adjust to the challenges experienced due to COVID.”

Is the Invocare share price in the buy zone?

As alluded to by this morning’s media release, there are a couple of tailwinds benefitting Invocare’s business.

Firstly, the strong performance of recently renovated funeral homes, which have outpaced un-renovated sites, is a positive indication that Invocare’s ‘Protect and Grow’ strategy has been worthwhile. As part of the strategy, Invocare has given a facelift to dozens of its funeral homes as a means to adapt to changing societal attitudes and client needs.

On the strong trends of its renovated facilities, Invocare’s CEO commented: “One of the key issues to arise from this pandemic has been the recognition by families of the important role of funeral services and this gives us confidence to continue upgrading our service offerings to ensure that we meet the changing needs of our client families into the future.”

The other significant tailwind that I believe will benefit the company in the long-term is Australia’s ageing population. Government figures from the Australian Institute of Health and Welfare  show that as of 2017, close to 4 million Aussies were 65 and over. With the largest market share of any national funeral operator, InvoCare’s operations will be a beneficiary of this macro trend.

Foolish takeaway

Invocare’s half-year results aren’t anything to write home about, but I’m still a believer in the company to perform strongly in the medium to long-term. The company has a track record of paying out a nice yield of 4%, and Australia’s ageing population and its continued investment in its funeral sites bodes well for Invocare moving forward.

At the time of writing, the Invocare share price remains 37% lower compared to its 52-week high of $15.79.

More reading

• These are the 10 most shorted shares on the ASX
• Are ASX tech shares the only way to protect your portfolio against the coronavirus?

Motley Fool contributor Toby Thomas owns shares of InvoCare Limited. The Motley Fool Australia has recommended InvoCare 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 Nearmap Ltd (ASX: NEA) share price slumped 13% in early afternoon trading following the release of the company’s FY2020 results this morning. Here’s why I think the Nearmap share price is one to watch.

What does Nearmap do?

Founded in Perth in 1998 in Perth, the company provides high resolution aerial imagery technology and location data for companies and government customers across Australia, the United States, Canada and New Zealand. Its technology enables clients to conduct virtual site visits rather than having to fly to and over site locations in person.

Nearmap shares listed on the ASX in 2000. Today the company has a market cap of $1.1 billion.

How did the company perform in FY20?

Nearmap reported an 18% increase in its annualised revenue contract value (ACV) from the previous corresponding period. ACV reached $106.4 million. North America remains the company’s largest market, but ACV growth in Australia and New Zealand is strong, up 11% on FY2019. 43% of Nearmap’s ACV portfolio is now on multi-year subscriptions, up from 40% the previous financial year,

Statutory revenue of $96.7 million was also up, representing a 25% increase over the previous period.

Nearmap reported a 47% rise in operating expenses. The company attributed this to targeted investment across the business to build foundations for scalable growth. Nearmap invested $49.5 million cash for asset creation to deliver long-term benefits for its business.

The company placed a strong emphasis on cash management due to the impacts of the coronavirus pandemic. Initiatives implemented in April included permanent and temporary reductions to employment costs. The cash balance for the financial year was $33.8 million. That’s down from $75.9 million on the previous year.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $9.1 million, down from $15.5 million in FY2019.

Weathering the storm

Nearmap reset its forward guidance in early February this year, after some its customers in North America were effectively shut down.

Nearmap CEO Dr Rob Newman said the company maintained that guidance through the second half, despite the coronavirus pandemic. “That’s a really good indicator that our business has been strong and resilient through this more challenging period,” he said.

Nearmap shares are down 7% year-to-date. But after slumping 68% from mid-January to its 25 March low as COVID-19 fears sent panicky investors rushing for the exits, the Nearmap share price has gained a blistering 171%.

Nearmap is listed on the S&P/ASX 200 Index (ASX: XJO). In comparison, the ASX 200 is down 9% since 2 January and up 23% from 25 March.

My chat with CEO Rob Newman

Nearmap CEO Dr Rob Newman said today that while 25% of the company’s ACV portfolio comprised architecture, engineering and construction, it was government – at 18% – that’s seeing some of the strongest growth. He noted the strength of Nearmap’s diversified portfolio included utilities, insurance, solar, and roofing – another strong growth area in North America.

“We have small subscriptions of $1,000 a year all the way up to subscriptions in the multi-millions. Our customers tend to have outside assets or need to plan jobs in and around cities,” Dr Newman said.

While COVID-19 has impacted companies across the globe, he said this could prove to be a tailwind for Nearmap. “Our customers need to continue running their businesses, they need to continue doing jobs outside. And they need to continue to assess their assets. We have a unique ability to provide that remotely,” he said.

Those unique abilities include Nearmap AI and the company’s 3D content. Dr Newman said they were “really helping our customer make good decisions without needing to go on site. Assessing the value or risk of a property, or assessing a claims adjustment, and government, which is doing so much with managing the outside environment.

Dr Newman said as a leader in its technology, the biggest threat facing Nearmap was “how quickly we can take a global opportunity that’s in front of us in the multi-billion-dollar aerial imagery market”.

The ‘Netflix of location’

Nearmap also boasts significant barriers to entry for any would be start-up competitors.

According to Dr Newman:

One of the things we’re very proud about is our technology leadership, and how we use that technology to solve customers’ problems. We were the first company globally to use a very high efficiency camera system for processing architecture. What other companies still take months to do, we do in days. Then we have our subscription business model. In many ways I think of us as the Netflix of location. We generate the content and we deliver it to our customers.

And now we have our 3D and AI. There is no other company in the aerial imagery space that would do that complete vertical integration on the scale we do. We do it for 80 million properties across the world.

I couldn’t resist asking him about Google Maps. And I was surprised by his answer:

Google has a consumer and autonomous vehicle focus. Google is not providing our kind of content to enterprises and government anymore. Late last year Google announced to every enterprise customer they had in North America that they’re no longer providing mapping content to those companies. That’s playing to our benefit, because we’ve had government insurance coming to us saying, can you replace what we were getting from Google.

As for future growth plans, Dr Newman said:

A number of our North American customers have asked if we can capture images in Europe and selected countries in Asia as well. But we have such an enormous opportunity in North America that our focus is really there. But as our customers ask about Europe and Asia, we will explore it.

As the company continues to grow in the first weeks of the 2020 financial year, I think the Nearmap share price is one to keep an eye on.

More reading

• Why a2 Milk, Kogan, Nearmap, & Resolute shares are dropping lower today
• ASX 200 up 0.8%: ANZ to pay dividend, a2 Milk tumbles, CSL impresses
• What if a Covid-19 vaccine never comes?
• The latest ASX stocks upgraded by brokers to “buy” today
• How the OZ Minerals share price is benefitting at Rio Tinto’s expense

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nearmap 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.

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The Scout Security Ltd (ASX: SCT) share price was up by a whopping 90.8% today before being placed in a trading halt pending a further announcement. The surge in the Scout Security share price followed an announcement by the company that its security system has been integrated with an Amazon.com Inc (NASDAQ: AMZN) device.

What does Scout Security do?

Scout Security sells a self-installed, wireless home security system, that is named ‘Scout Alarm’. The system has the capability  of being integrated with other Internet of Things (IoT) devices within the home environment.

What did Scout Security announce today?

Scout announced to the market today that its security system has been integrated with Amazon’s Alexa Guard offering and is now immediately available to its customer base. Amazon is currently a shareholder of Scout and has been a long-time partner of the home security system provider.

Amazon’s Alexa Guard system utilises Amazon Echo devices to provide a range of home monitoring features. These include detecting the sound of breaking glass, smoke alarms and detecting carbon monoxide. Alexa Guard is capable of then sending ‘Smart Alerts’ to home users when these sounds are detected. The Alexa Guard system is now integrated with the Scout Alarm, which can, in turn, despatch police to the home when an alert is triggered.

Alexa Guard is capable of being activated on a range of Amazon devices. These include the Echo, Echo Show, Echo Spot, Echo Dot, Echo Plus and the Echo Input.

Commenting on the Amazon Guard integration, Scout CEO, Dan Roberts, said:

We believe that the Scout platform has some of the best-in-class integrations for smart home security and the integration with Alexa Guard further enhances our capabilities. The more deeply the devices integrate across the smart home ecosystem, the better the user experience becomes and the more utility users gain, in our view. Amazon Guard is a unique capability that can offer another layer of security to our users and we’re excited to make it available to our customer base.

How has the Scout Security share price been performing?

The Scout Security share price fell heavily in the early phase of the coronavirus pandemic, however rose strongly during July. With its 91% gain today, the Scout Security share price was asking 14.5 cents prior to the pause in trading taking effect.

More reading

• How Aussies can buy Warren Buffett shares without paying $445,000
• Stock split watch: Could Amazon be next?
• ASX investors have been buying these international shares
• MoneyMe share price surges, but is it sustainable?
• Here’s what a stock split means for investors

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Phil Harpur 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 Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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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AMP Limited (ASX: AMP) announced to the market that it would release its report into sexual harassment allegations against AMP Capital chief Boe Pahari.

The finance company’s board had been attacked this week by the alleged victim of the harassment, federal politicians and investors for overlooking serious conduct accusations in promoting Pahari to the CEO role.

Pahari was accused of a series of unwanted advances in 2017 towards a female subordinate, who filed a complaint and later left the company.

Meanwhile Pahari was promoted to the position of AMP Capital chief executive.

AMP had consistently defended that decision, saying the offences were found to be “low level”.

But the details of the allegations were made public this week, which has contested the company’s judgment.

The allegations included the male executive sending the employee on a frivolous work trip to London, saying she made him look like a “limp dick” when an offer to buy her clothing was refused, unilaterally altering her hotel booking and requesting communication over Whatsapp to avoid detection.

The alleged victim called for AMP to release the full report that the board had considered before promoting Pahari.

On Wednesday morning, AMP released a statement to the ASX that it would meet that request.

“The AMP board is willing to release the QC’s investigation report, which includes its findings,” the statement read.

Other than Pahari and the alleged victim’s names, all other identities would be redacted.

Labor Senator Deb O’Neill told Nine on Tuesday that both Pahari and AMP chair David Murray should resign.

“It’s time for a very significant shake-up in AMP. There are massive cultural problems.”

Louise Davidson, boss of share investor lobby group Australian Council of Superannuation Investors, said Pahari’s position was not tenable.

“It concerns me particularly that the company has tried to downplay the seriousness of the [alleged] sexual harassment.”

AMP, in Wednesday’s statement, still defended the board’s decision.

“The current group board was advised of the matter prior to Mr Pahari’s appointment as AMP Capital CEO and another review was undertaken,” the company stated.

“Following that review, all board members were satisfied with the thoroughness of the investigation and the process followed.”

AMP’s share price had fallen 1.23% to $1.45 by lunchtime Wednesday.

More reading

• Investors call for AMP Capital CEO’s head
• Why today is a great day to add to your ASX share portfolio
• ASX 200 drops 0.7%, Telstra falls 7.7%
• Earnings: AMP share price soars despite $107 million drop in profits
• ASX down 0.55%: Telstra maintains its dividend, Treasury Wine shoots higher, AMP’s special dividend

Motley Fool contributor Tony Yoo 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 worst performer on the S&P/ASX 200 Index (ASX: XJO) on Wednesday has been the Resolute Mining Limited (ASX: RSG) share price by some distance.

The gold miner’s shares crashed as much as 20% lower to $1.08 today.

At the time of writing, they have recovered a touch but remain down a disappointing 17.5% to $1.11.

Why is the Resolute share price crashing lower?

Investors have been selling Resolute shares on Wednesday amid concerns over events that are unfolding in Mali.

According to the ABC, Mali’s President has announced his resignation on state television and will dissolve the country’s parliament. This is just hours after mutinying soldiers detained President Ibrahim Boubacar Keita and a number of top officials from his government.

This news has led to the Economic Community of West African States (ECOWAS) closing their borders with Mali. ECOWAS has also stated that it will be suspending all financial flows between its 15 members and Mali and suspending Mali from its decision-making bodies.

How does this impact Resolute?

This development has the potential to impact Resolute due to its key Syama Gold Mine in the country.

During the June quarter the Syama operation contributed 63,705 ounces of gold production. This represents 59.4% of its total production of 107,183 ounces during the quarter.

Any potential disruption to its operations would clearly have a material impact on its future production. Though, it is worth noting that at this stage, this hasn’t been the case. And this could remain the case in the future depending on what government is formed in the coming months.

But given the mutiny and the uncertainty about what lies ahead, I can’t say I’m surprised to see Resolute’s shares come under pressure today.

Resolute operational update.

This afternoon the company responded to the news with a brief announcement.

Management advised that: “[Resolute] is closely monitoring developments in Mali following the resignation of President Ibrahim Boubacar Keita. The resignation of the President, and the subsequent dissolution of the government, follows action by sectors of the country’s military seeking to resolve the recent political crisis.”

“Operations at the Company’s Syama Gold Mine, located in the south of Mali on the border with Côte d’Ivoire, are continuing as normal with no impact to production or the safety and security of employees and contractors. Resolute has operated Syama since 2003 under the well-established mining laws of Mali,” it concluded.

More reading

• Why a2 Milk, Kogan, Nearmap, & Resolute shares are dropping lower today
• ASX 200 up 0.8%: ANZ to pay dividend, a2 Milk tumbles, CSL impresses
• 5 things to watch on the ASX 200 on Wednesday
• Take a look at last week’s worst performing ASX shares
• Why CIMIC, oOh!Media, ResMed, & Resolute shares are dropping 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.

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The Fiji Kava Ltd (ASX: FIJ) share price flew higher today and is up by 71.88% at the time of writing to 28 cents. This came after the company announced that it had landed a partnership to supply its medicinal products to China.

What was in the announcement?

According to Fiji Kava, it signed an agreement with PuMate (Shanghai) as its authorised distributor to supply the company’s medicinal products to China. Fiji Kava stated that the landmark agreement includes a minimum sales requirement of $8 million over the initial 3-year term of the agreement.

The agreement is extendable for periods of 12 months each after the initial 3-year term. If PuMate reach a target of $10 million in annual gross revenue, Fiji Kava have agreed to issue the distributor 1.5 million options at a discount of 15% to the 30-day volume weighted average price, subject to shareholder approval.

Fiji Kava stated that the agreement includes diversified distribution channels into China with both branded Fiji Kava products and raw Noble Kava extracts to be sold in China’s complementary medicine, personal care and pharmaceutical industries as well as through e-commerce marketplaces.

Fiji Kava non-executive director Nicholas Simms stated:  “This agreement has been structured in a way that diversifies our revenue streams in China via co-development possibilities with manufacturers of vitamins and supplements in China, and sales of Fiji Kava’s existing product ranges through cross-border eCommerce marketplaces and retail partners.”

According to the announcement, China’s vitamin and supplement market is worth $30 billion per year.

About the Fiji Kava share price

Fiji Kava is an Australian-Fijian company that produces ‘noble kava’ products for the complementary and alternative medicine market. Its products are TGA and FDA compliant. Fiji Kava has been listed on the ASX since 2018.

Earlier this month, Fiji Kava announced that it had signed a major agreement with a subsidiary of Blackmores Limited (ASX: BKL), BioCeuticals. Under the agreement, BioCeuticals will have a licence to add Noble Kava produced by Fiji Kava to its AnxioCalm product.

The Fiji Kava share price is up 865% since its 52-week low of 2.9 cents and up 358% since this time last year.

More reading

• Fiji Kava share price soars 90% on Blackmores subsidiary agreement, trade paused

Motley Fool contributor Chris Chitty 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.

Most people would agree that 2020 has had more than its share of disasters. In fact, thanks to the novel coronavirus, the country is living through both a major public health crisis and a major economic crisis concurrently.

Unfortunately, times of trouble are a fact of life and everyone is bound to experience them sometimes. But, as a recent survey from Ameriprise Financial shows, there’s some good news: The majority of investors surveyed (more than 3,000 were surveyed and each had at least $100,000 in financial assets) realise the potential for problems and have taken some steps to prepare for unexpected bumps in the road.

Here are some of the key steps they’ve taken. 

1. Saving for emergencies

Saving for emergencies is, unsurprisingly, the top way people prepare for calamities that life could throw at them. In fact, 64% of survey respondents indicated they had set aside money for emergencies. This is a smart move, both because it can provide you with some peace of mind during these challenging times and because it can help you to protect your long-term financial security.

If you have no emergency fund and you experience a job loss, cuts to your employment hours, or unexpected expenses, you’ll likely have only bad options to resolve your financial problems. Borrowing money to cover your surprise costs could saddle you with interest payments, leaving bills unpaid could ruin your credit score and have other dire consequences, and being forced to sell stock or other investments before you’re ready could mean locking in losses if you get stuck selling during a market downturn. 

Most experts recommend having an emergency fund to cover at least three months of living expenses and ideally closer to six months. With COVID-19 cases spiking nationwide, the country in a recession, and the threat of a stock market crash looming, erring on the side of caution and saving a larger emergency fund is probably best. 

2. Preparing for life after death

Preparing for what happens after you die isn’t fun, but it’s a key part of financial preparedness because most people want to make sure their loved ones are provided for.

As many as 62% of survey respondents indicated they’ve named their beneficiaries, and the same percentage have purchased life insurance. Thirty-eight percent have also made a formal estate plan, or at least a will, with help from a financial professional.

If you have anyone depending on your income or the services you provide (such as taking care of children or elderly parents) this is a key step toward financial readiness. Most people don’t have enough invested for their loved ones to live on if their income stops coming. If you don’t but people are counting on you, you need to have plans in place to protect them.

3. Adjusting their lifestyle

Almost four in 10 Americans indicated they’ve made lifestyle choices to prepare for potential unexpected events in the future.

By cutting back on unnecessary spending and making other smart financial moves, you can use the money to build up the aforementioned emergency fund that will help protect you from the financial pain of unexpected expenses.

Adjusting your lifestyle can also be a smart move to free up more money to invest for your future. If there’s another market crash, it may present great buying opportunities. If you have spare cash to purchase shares at a discount, you can maximize your potential returns on investment and set yourself up for more security later in life.

And if any of your investments sustained losses during the last market crash but didn’t fully recover in the rally that followed, making lifestyle changes so you can invest more could help you get back on track toward achieving your goals. 

4. Making a comprehensive financial plan

Close to a third of Americans worked with a professional to make a comprehensive financial plan in order to be ready for financial disasters. 

Having this type of roadmap can ensure you’re making the wisest use of your money and investing what you need to build wealth. While many people find they need guidance from a professional to make a long-term financial plan and develop a sound investment strategy, this isn’t necessarily the case for everyone. If you take the time to sit down, set your own goals, and determine what you need to achieve them, you’ll still be putting yourself in a good position to cope with anything unexpected that comes your way. 

Should you take these steps?

Protecting yourself and your loved ones in case of emergency is always important but it may be especially so during these turbulent times with coronavirus cases spiking and a growing number of states locking down again – which could potentially result in a deeper recession.

Making an emergency fund, providing for your family in case of your untimely death, and living within your means are important always, but are especially essential now – so be sure to check these items off your to-do list ASAP. 

Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

More reading

• Nearmap share price slides 13% on release of financial results
• Scout Security share price soars 91% on new Amazon deal
• AMP to release sexual harassment details, won’t sack anyone
• Resolute share price crashes lower amid Mali military mutiny
• Fiji Kava share price explodes 71% after company lands partnership to supply to China

Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Shares in Reject Shop Ltd (ASX: TRS) have dipped 12% after the company reported its results for FY20. At the time of writing, The Reject Shop share price had dropped to $6.82 after closing yesterday’s session at $7.75.

How has The Reject Shop performed in FY20?

Earlier today, The Reject Shop released its financial results for FY20.

The report was highlighted by a net profit of $1.1 million for FY20 which saw that The Reject Shop return to profitability. However, the net profit result was below consensus forecast of $2.2 million for the year ending 30 June.

Additional highlights from the company’s report included a 3.4% increase in sales for FY20 of $820.6 million. In addition, earnings before interest, taxes, depreciation and amortisation (EBITDA) for FY20 also surged 30.1% on the prior corresponding period to $23.7 million with The Reject Shop boasting free cash flow of $61.6 million.   

According to the company, sales growth was fuelled by strong consumer demand for ‘essential’ products during the COVID-19 pandemic. The Reject Shop reported strong performances in cleaning products, groceries, toiletries and pet care. The company also reported a surge in demand for ‘at home’ items such as stationary, craft products, kitchen needs and electronic appliances.

Despite a miss in net profit expectations, the Reject Shop’s performance in FY20 is a huge improvement from its $16.9 million loss in FY19. The company’s management attributed the turnaround to a rebound in sales and heavy cost cutting. This was reflected in the company’s cost of doing business, which fell to 26.7 % in FY20 from 39.9% a year ago.

The Reject Shop also noted $92.5 million cash on hand for FY20 and declared no dividend.

What is the outlook for The Reject Shop?

The Reject Shop highlighted that the COVID-19 pandemic has provided the company with the opportunity to reset and grow.

Management noted that with uncertain, future economic conditions, the company’s product range could appeal to more consumers. The retailer also highlighted that the discount-variety sector is under-represented in the Australian retail market.

As Australia’s largest discount-variety store, The Reject Shop maintains that the company is well positioned to capture growing market share. In order to harness the opportunity, The Reject Shop plans to simplify the business and shrink its product range and inventory.

In addition, the company will look to refresh its merchandise mix in favour of more essential items. In doing so, The Reject Shop hopes to reverse a 3-year slide in earnings.  

About The Reject Shop share price

As mentioned, at the time of writing The Reject Shop share price has fallen 12% in today’s trade. The Reject Shop share price has recovered 184% since its March low and has increased 105% in year-to-date trading. 

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Motley Fool contributor Nikhil Gangaram 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 Pact Group Holdings Ltd (ASX: PGH) share price surged this morning after the company released its full-year earnings for the 2020 financial year.

Pact shares closed at $2.36 yesterday, but have opened higher at $2.40 this morning. After rising as much as 9%, the Pact share price has settled somewhat and is up 6.3% to $2.52 at the time of writing.

It’s a rare piece of good news for shareholders, who have had to watch the Pact share price drop from nearly $7 in 2017 to less than $1.50 back in March.

What did Pact announce this morning?

It was a mixed bag of results for Pact today. The packing solutions provider reported $1.809 billion in revenues, down 1% from the $1.834 in FY19. Statutory earnings before interest, tax, depreciation and amortisation (EBITDA) were $302 million. Adjusting for the adoption of AASB16 leases, EBITDA was  $234 million, up 1% on FY19. Net profits after tax (adjusted) were up 5% to $81 million. If significant items are included, this rises to $92 million from a -$290 million loss in FY19.

Meanwhile, earnings per share (EPS) went from a loss of -85.3 cents in FY19 to a statutory 25.8 cents in FY20 (or 26.7 cents adjusted). The company managed a return on invested capital (ROIC) of 12.6% (adjusted) which was a 1.5% improvement on FY19’s 11.1%.

Dividends make a comeback

Perhaps the biggest news from Pact Group’s earnings was the resumption of dividend payments. Pact hasn’t paid a dividend since 2018 after scrapping its payments last calendar year. Pact shareholders receive a 3 cents per share dividend, franked to 65%, on 7 October. It’s a long way from what shareholders would be used to (Pact’s last dividend in 2018 was 11.5 cents per share). But it’s a pleasing development, nonetheless.

What’s ahead for the Pact share price?

In terms of outlook, Pact gave no concrete guidance, but expects its diversified portfolio to be “resilient, with trading in the first quarter of FY21 in most sectors to be generally in line with recent trends”. The company told investors that a trading update on FY21 will be provided at the company’s annual general meeting on 18 November.

The company did recommit to its 2025 goals of a ROIC of 15% and being in the top quartile for shareholder returns.

Pact also announced the formalisation of a joint venture (to be called Circular Plastics Australia) with Japan’s Asahi Beverages and Cleanaway Waste Management Ltd (ASX: CWY) to develop a $45 million recycling facility in Albury/Wodonga. The new centre (which Pact will have a 40% share of) will be capable of recycling around a billion PET bottles a year and, according to the company, will “lift Australia’s PET recycling capacity by 28,000 tonnes, or 50%, to 85,000 tonnes”.

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

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