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The Origin Energy Ltd (ASX: ORG) share price is soaring this morning despite news the consortium looking to acquire the energy provider has lowered its offer price.

After an extended due diligence period, the consortium comprising Brookfield Asset Management and MidOcean has dropped its bid to $8.90 per share. That’s 1.11% lower than its previous $9 per share offer.

After open this morning, the Origin share price shot to a high of $8.02, a jump of 14% on yesterday’s close. Right now, the Origin share price is $7.91, 12.84% higher than its previous close.

Let’s take a closer look at the latest news from the S&P/ASX 200 Index (ASX: XJO) energy company.

Origin share price rockets as takeover bid dropped to $8.90

The Origin share price is taking off this morning as the company backs a newly-reduced takeover bid.

It follows a drawn-out due diligence period. Thus, the market may be relieved to learn the suitors are still interested after flicking through the takeover target’s books. Though, the Origin share price remains notably lower than the offer price, perhaps suggesting investors remain wary of the deal.

Origin’s board still thinks the lower bid “has the potential to deliver significant value to shareholders”. Thus, it’s vowed to continue discussions with the consortium.

The now-$8.90 per share offer will stand for the first 100,000 stocks held by an investor. After that, shareholders will receive $4.334 and US$3.194 per share – equivalent to $8.90 at an exchange rate of 70 US cents for every Aussie dollar.

That will be reduced by any dividends paid by Origin between now and the takeover’s completion. Of course, that includes the 16.5 cents per share fully franked dividend the ASX 200 constituent revealed last week.

The US dollar consideration reflects the underlying exposure of Origin’s integrated gas assets. Specifically, cash distributions from the 27.5% interest in Australia Pacific LNG.

The offer is conditional upon a number of matters including regulatory approval and black box due diligence.

Brookfield and MidOcean first put forward their $9 per share bid in November. At the time, it represented a near-55% premium to the Origin share price and valued the company at more than $18 billion.

Back then, Origin said it had rejected an offer of between $8.70 per share and $8.90 per share from the consortium in September.

The post Origin share price surges 14% despite lower takeover bid appeared first on The Motley Fool Australia.

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More reading

• Origin Energy share price drops on underlying profit tumbling 83%
• Why Liontown, Megaport, Origin, and Tyro shares are pushing higher today
• Origin share price higher on earnings guidance upgrade

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brookfield Asset Management. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Santos Ltd (ASX: STO) share price is marching higher in early trade, up 1.6%.

The S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $6.81. Shares are currently changing hands for $6.92.

This comes following the release of Santos’ full-year 2022 financial results.

Here are the highlights.

(*Note all figures are in US dollars.)

Santos share price gains amid surging profits

• Record production of 103.2 million barrels of oil equivalent (mmboe), up 12% from 2021
• Record revenue from ordinary activities of $7.8 billion, up 65% year on year
• Net profit increased 221% from 2021 to $2.1 billion
• Earnings before interest, taxes, depreciation, amortisation, and exploration expense (EBITDAX) of $5.6 billion, up 101% from 2021
• Final unfranked dividend of 15.1 US cents per share, up 78%

What else happened during the year?

Other metrics of interest that could be lifting the Santos share price today include the 160% year on year increase in underlying profit, which came in at $2.5 billion.

(Santos notes that this measure excludes the impacts of asset acquisitions, disposals and impairments, as well as items that are subject to significant variability from one period to the next, including the effects of commodity hedging.)

Santos also reported ending the year with a record reserve and resource position of 5 billion boe, with 165 mmboe 2P reserves added in Alaska following the sanction of Pikka Phase 1.

2022 also saw Santos successfully implement its merger with Oil Search, which it said included the realisation of $122 million of annual synergies.

The Barossa gas project faced some delays but is now 55% complete.

And with free cash flow from operations leaping 142% year on year to $3.6 billion, Santos strengthened its balance sheet with $5.6 billion of liquidity at 31 December. Net debt came down by $1.7 billion to end the year at $3.5 billion.

What did management say?

Commenting on the results that look to be boosting the Santos share price today, CEO Kevin Gallagher said:

We have commenced 2023 with a high level of confidence that Santos will execute its strategic plan and deliver sustainable returns to shareholders as a result. Demand for our products is likely to continue to be strong in 2023 and beyond.

What’s next?

Looking ahead to what could impact the Santos share price over the coming months, the company offered 2023 production guidance of 89 to 96 mmboe with sales volumes of 90 to 100 mmboe.

Capital expenditure for major projects, including Santos Energy Solutions is forecast to come in at around $1.8 billion. And upstream production costs for 2023 are expected to fall in the range of $7.25 to $7.75/boe.

Santos share price snapshot

As you can see in the chart below, the Santos share price – which doesn’t include the dividend payouts – is down just over 2% since this time last year. Longer-term, shares are up 35% over five years.

The post Santos share price marches higher on surging dividend payout appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• Here are the best ASX shares to buy for the coming decade: Firetrail
• 5 things to watch on the ASX 200 on Monday
• Santos share price edges lower amid allegations of disastrous deception

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is sinking on Wednesday.

At the time of writing, this pizza chain operator’s shares are down 23% to $54.80.

This follows the release of the company’s half-year results this morning.

Domino’s share price sinks as inflation bites

• Global sales up 1.2% to $1.97 billion
• Online sales down 4.5% to $1.53 billion
• Earnings before interest and tax (EBIT) down 21.3% to $113.9 million
• Underlying net profit after tax down 21.5% to $71.7 million.
• Partially franked interim dividend down 23.8% to 67.4 cents per share

What happened during the half?

For the six months ended 31 December, Domino’s reported a 1.2% increase in sales to $1.97 billion. This was driven by the addition of 357 new stores, which offset a 4.5% decline in online sales. The latter reflects lower aggregator sales and a shift from delivery to carry-out.

Things were much worse for the company’s EBIT, which tumbled 21.3% during the half. That’s despite ANZ EBIT rising 5.2% to $63.4 million on marginally lower sales of $687.3 million.

The main drag on its performance was its European operations, which have been more affected by inflation. This is largely due to higher levels of inflation affecting larger markets including Germany and France.

Management notes that passing through input costs in Europe has seen a decline in customer counts across multiple markets, particularly in delivery. Nevertheless, delivery orders remain elevated versus pre-COVID levels, and management is working to rebalance the value equation for customers and franchisees.

This earnings decline ultimately led to the Domino’s board slashing its dividend by 23.8% to 67.4 cents per share.

Management commentary

Domino’s CEO and Managing Director, Don Meij, acknowledged that the company’s management of inflation has been disappointing. He said:

Given the challenging conditions and the effect on our franchisees we felt it was necessary to lift prices, including applying some surcharges. This was successful in protecting franchisee profitability, however given the speed of the change it was difficult to forecast the effect on customer repurchasing rates, especially where customers order less frequently such as Japan or Germany.

It meant while we saw an initial benefit to franchisees’ unit economics, specific customer groupings, particularly in delivery, reduced their ordering frequency which resulted in December trading being significantly below our expectations.

Fortunately, the customer demand globally for freshly prepared, affordable out-of-home meals, remains strong. This gives us confidence that the power to overcome these short-term challenges is within our control and we will continue to work to get the balance right.

Outlook

While a poor first-half result was expected by the market, the softer than expected start to the second half appears to have spooked investors and put pressure on the Domino’s share price today.

Management revealed that sales growth in the second half has been less than anticipated with same store sales down 2.2% and total sales up 4.2%. In light of this, management believes that its full-year same store sales growth will be below its medium term target of 3% to 6% in FY 2023.

Making things worse, the company warned that its new store openings may also be below its medium term target of 8% to 10%. This will depend on franchisee sentiment in the current environment.

Nevertheless, management is confident in the ability to return to positive same store sales growth once it is able to balance the value equation for customers.

It notes that the “newest product, pricing and voucher initiatives we are testing and implementing are showing promise, but it is too early for us to be definitive on the outlook for their performance.”

The post Domino’s share price crashes 23% following disappointing first-half result appeared first on The Motley Fool Australia.

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More reading

• Buy these beaten down ASX shares now: experts
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• Top ASX growth shares to buy in February 2023
• How I’d invest $300 a month in ASX shares to target an extra income of $20,000 per year
• Morgans names 2 more of the best ASX shares to buy in February

Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. 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 WiseTech Global Ltd (ASX: WTC) share price is trading lower on Wednesday.

In morning trade, the logistic solutions company’s shares are down 2.5% to $54.29.

This follows the release of the company’s half-year results.

WiseTech share price drops on half-year results

• Revenue up 35% to $378.2 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) up 36% to $187.3 million
• Underlying net profit after tax up 40% to $108.5 million
• Free cash flow up 53% to $137.8 million
• Interim dividend increased 39% to 6.6 cents per share

What happened during the half?

For the six months ended 31 December, WiseTech reported a 35% jump in revenue to $378.2 million. This was underpinned by a 50% increase in CargoWise revenue to $289.2 million, which was driven by growth from existing and new customers.

This means that recurring revenue now makes up 96% of the company’s revenue, which is up 3 percentage points since this time last year.

Thanks to enhanced operating leverage, pricing, new product releases, and ongoing financial discipline, WiseTech overcame inflationary pressures to deliver modest margin expansion during the half.

This ultimately led to its underlying net profit after tax increasing by 40% to $108.5 million.

Management commentary

WiseTech Founder and CEO, Richard White, was pleased with the company’s strong first half. He said:

Our strong first half performance highlights the continued resilience of our business model and progress of our 3P strategy. Our ability to deliver strong growth in revenue, earnings and free cash flow, in a softening global macroeconomic climate, is the result of a tremendous effort by our teams around the world and we’re immensely proud of the progress we are making towards our vision of being the operating system for global logistics.

We continue to see strong demand for our products from the world’s largest freight forwarders, having secured four new global rollouts and three organic global rollouts since July last year. CargoWise is rapidly becoming the industry standard. Importantly, in January this year, we also secured our first global customs rollout with Kuehne+Nagel, the world’s largest global freight forwarder. This is a testament to the success of our foothold acquisition strategy and our customs product development, as we build out a global customs engine.

Outlook

WiseTech has updated its FY 2023 guidance and now expects stronger revenue growth but slightly softer EBITDA growth. The latter could be weighing on the WiseTech share price today. Its guidance is now:

• Revenue of $790 million to $822 million (growth of 26% to 30%)
• EBITDA excluding M&A costs of $380 million to $412 million (growth of 19% to 29%).

This compares to previous guidance of 20% to 23% revenue growth and 21% to 30% EBITDA growth.

Mr White concluded:

WiseTech is a business that continues to grow and create value. Our unique CargoWise offering, which we expand and enhance through our own product development and our acquisition program, is enabling us to drive considerable momentum. This is underpinned by our global rollouts, stemming from an investment of over $775 million in research and development over the last five years.

We have a strong track record of delivering on our strategy, demonstrating the strength and resilience of our business model. Our strong balance sheet and cash generation provide us with significant financial firepower to fund our future growth. I am excited by the opportunities ahead of us and the future growth team WiseTech will deliver.

The post WiseTech share price drops despite strong earnings growth appeared first on The Motley Fool Australia.

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More reading

• WiseTech share price lower despite blockbuster $600m acquisition
• Looking for growth? 3 ASX shares experts rate as buys
• 2 highly-rated ASX growth shares to buy according to experts
• Which ASX 200 shares are rebounding fastest in 2023?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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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All eyes are on the Flight Centre Travel Group Ltd (ASX: FLT) share price this morning after the company dropped its earnings for the first half of financial year 2023.

Shares in the S&P/ASX 200 Index (ASX: XJO) travel agency last traded at $18.60.

Flight Centre share price in focus as revenue triples

Here are the major takeaways from the travel giant’s results:

• $2.4 million underlying post-tax loss – up from the prior comparable period’s (pcp) $188 million loss
• $1 billion of revenue – a 217% jump on that of the pcp
• $9.9 billion of total transaction value (TTV) – triple that of the pcp
• $95 million of underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) – up from a $184 million loss
• No dividend declared

Flight Centre posted a profitable period for both its corporate and leisure businesses, as well as all geographic segments aside from Asia.

Its global corporate travel business revealed a record $5 billion in TTV, while its leisure business posted $4.4 billion in TTV – up 150% and 441% respectively.

It ended the period with a $465 million net cash position.

What else happened last half?

But it wasn’t all easy for Flight Centre last half.

Whiles its costs were 70% of pre-COVID levels in the first half, its short-term profitability was dinted by recruitment and training, development, and sustainability.

The company’s revenue margin also lifted from 0.4% to 10.1% in the period. That’s lower than normal amid high airfares, more air-only sales, and heavier corporate weighting.

What did management say?

Flight Centre CEO Graham Turner commented on the news likely to drive the company’s share price today, saying:

Flight Centre Travel Group has delivered a solid start to FY23 in an improved, but not fully recovered, trading environment.

While we continue to monitor market conditions. we are not currently seeing evidence that the recovery is slowing with the leisure business currently trading at post-COVID highs and corporate travel activity escalating after the traditional holiday period.

While travel is a discretionary purchase, customers typically view it as essential and prioritise it above other discretionary items.

What’s next?

Flight Centre notes its first-half underlying EBITDA came in 19% higher than the mid-point of its initial financial year 2023 guidance.

It’s now expecting to post between $250 million and $280 million of underlying EBITDA this fiscal year, excluding the contribution of its recently acquired Scott Dunn business.

The company also points out that airline capacity is recovering, which is expected to lower the price of fares and allow for higher volumes. Its international capacity is tipped to reach 85% of pre-COVID levels by the end of June.

Flight Centre share price snapshot

The Flight Centre share price has been taking off in 2023.

The stock is currently up 29% year to date. Though, it’s 5% lower than it was this time last year.

For comparison, the ASX 200 has jumped 6% year to date and 2% over the last 12 months.

The post Flight Centre share price on watch as revenue triples, reaching $1b appeared first on The Motley Fool Australia.

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More reading

• Here are the 10 most shorted ASX shares this week
• Own Flight Centre shares? Here’s what the market expects from its half year results
• Are whales dipping in and out of this ASX 200 travel share?
• Someone just bought $22 million of Flight Centre shares. Here’s what we know
• Here are the 10 most shorted ASX shares

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group. 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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If you’re looking for a passive income boost, then it could be worth considering the ASX dividend shares listed below.

Both of these dividend shares have been tipped to provide big dividend yields and climb meaningfully higher from current levels. Here’s what you need to know about these high yield shares:

Adairs Ltd (ASX: ADH)

The first ASX dividend share that could be a top option is Adairs. It is the leading furniture and homewares retailer behind the eponymous Adairs brand, as well as the Focus on Furniture and Mocka brands.

Earlier this week, Adairs released its half-year results and reported a 34.1% increase in sales to a record of $324.2 million and a 23.9% jump in net profit after tax to $21.8 million.

And while trading conditions are expected to be tougher in the second half and FY 2024, UBS believes it is worth sticking with the company.

In response to its results, UBS put a buy rating and $2.95 price target on the company’s shares.

As for dividends, the broker is forecasting fully franked dividends per share of 16 cents per share in FY 2023 and FY 2024. Based on the current Adairs share price of $2.24, this will mean yields of 7.1%.

Dalrymple Bay Infrastructure Ltd (ASX: DBI)

Another ASX dividend share that has been named as a buy is Dalrymple Bay Infrastructure.

It is an infrastructure company that operates the Dalrymple Bay Coal Terminal (DBCT) on a long term agreement.

Morgans is a fan of the company and believes it is well-placed to pay big dividends in the near term. This is thanks to the strong demand for coal and its position as the cheapest export route-to-market for users within the Bowen Basin catchment region.

The broker currently has an add rating and $2.67 price target on its shares.

As for dividends, its analysts are forecasting dividends per share of approximately 21 cents in FY 2022 and FY 2023. Based on the latest Dalrymple Bay Infrastructure share price of $2.45, this will mean massive yields of 8.6%.

The post Supercharge your passive income with these ASX shares: experts appeared first on The Motley Fool Australia.

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More reading

• 2 ASX All Ords shares I think can make big returns by 2025
• ASX investors: 3 of the best Aussie dividend stocks to buy this year
• Top ASX small-cap shares to buy in 2023
• How a stock market crash could turbocharge my ASX share portfolio
• Adairs share price falls amid strong first half growth but guidance downgrade

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. 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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There are some All Ordinaries (ASX: XAO), or All Ords, ASX shares that have fallen heavily over the past year or so. I think that some of these beaten-up names could be some of the best opportunities to buy for a two-year or three-year timeframe.

The outlook for some ASX shares is looking a bit tougher than in 2021. However, I don’t believe that the poor conditions are going to last forever, which I think is how businesses are sometimes priced during a sell-off like the current period.

While retail is not the most defensive sector, I think there is the potential for investors to pick up shares at cyclical lows, and then ride the recovery back up again, though a turnaround could take a bit of time. That’s where being patient is a very useful trait. By 2025, I think both of these names can deliver share price growth of at least 30% as market sentiment returns and their growth plans are carried out.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is one of the leading online-only homewares and furniture retailers.

The Temple & Webster share price has fallen over 70% since mid-October 2021 and it’s down 37% in February 2023. I believe that the current level makes it an attractive time to invest.

Management point out that, over the longer-term, e-commerce in the Australian furniture and homewares category “remains highly under-penetrated” and that it has a “much larger addressable market to go after” with the categories of home improvement and trade and commercial.

The All Ords ASX share is seeing its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) improve over time as it scales. The FY23 second quarter saw EBITDA generation of $5.2 million, while the FY22 second quarter saw EBITDA of $4.6 million.

While the FY23 half-year revenue was down, the business is expecting to return to double-digit revenue growth in the shorter term. Over time, the company expects to grow its EBITDA margin from 3.8% in FY22 to more than 15% over the long-term thanks to scale benefits.

Adairs Ltd (ASX: ADH)

Adairs is a somewhat similar business – it also sells homewares and furniture, though the range is smaller.

The Adairs share price is down 53% from June 2021 and it’s down 22% in February 2023.

This All Ords ASX share just released its FY23 half-year result, showing sales growth of 34.1% to $324.1 million, while earnings per share (EPS) went up by 22.2% to 12.7 cents. It also revealed that Adairs store floor space increased by 2.4%.

Adairs’ new national distribution centre has been “below expectations”, which has affected customer experiences, as well as “significantly higher cost of operations”. However, there are “early signs that operational outcomes are improving”. A new pricing model started in January 2023, which “will see average variable costs per unit dispatched reduce by 20%” compared to the FY23 first half level. Warehousing costs added $5 million compared to the first half of FY22.

The All Ords ASX share is working on reducing costs, while group sales in the first seven weeks of the second half of FY23 were up 1.8% year over year. It’s still expecting to make between $70 million to $80 million of earnings before interest and tax (EBIT) in FY23.

I think that the supply chain and inflation issues will improve over 2023, while total sales could seem more resilient in a downturn thanks to ongoing store growth and expansion efforts.

The post 2 ASX All Ords shares I think can make big returns by 2025 appeared first on The Motley Fool Australia.

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More reading

• ASX investors: 3 of the best Aussie dividend stocks to buy this year
• Top ASX small-cap shares to buy in 2023
• How a stock market crash could turbocharge my ASX share portfolio
• Adairs share price falls amid strong first half growth but guidance downgrade
• Why term deposits can’t compete with these 5 ASX dividend machines

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs and Temple & Webster Group. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool Australia has recommended Temple & Webster Group. 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 Westpac Banking Corp (ASX: WBC) share price has seen plenty of volatility since the start of the COVID-19 pandemic. But, at the current valuation, the ASX bank share looks like a leading contender.

There is a lot of competition in the banking space, including Commonwealth Bank of Australia (ASX: CBA), ANZ Group Holdings Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB), Bank of Queensland Limited (ASX: BOQ) and Bendigo and Adelaide Bank Ltd (ASX: BEN).

The last 12 months have been an interesting time for the banking sector with how interest rates have rapidly shot higher.

ASX bank shares like Westpac have come under pressure for passing on interest rate hikes quickly to borrowers, but not being as generous to savers.

In the current environment, I think there are a couple of key reasons why the Westpac share price looks cheap:

Low price/earnings ratio

The bank has a very low price/earnings (P/E) ratio. What that means is that it’s trading at a low multiple of its earnings.

While an extremely low P/E ratio isn’t necessarily what investors need to find, it can be helpful to find ones that are at good value, and hopefully buying a lower P/E ratio for that same business is usually helpful.

According to Commsec, Westpac could generate $2.04 of earnings per share (EPS). At the current Westpac share price, that puts the forward P/E ratio at 11 times FY23’s estimated earnings.

That seems relatively cheap, particularly when compared to a peer like CBA which is currently trading at 17 times FY23’s estimated earnings, a significantly more expensive valuation.

The lower P/E ratio also has a pleasing bonus – the dividend yield is particularly high. Commsec numbers suggest that the Westpac dividend per share could be $1.38, with a grossed-up dividend yield of 8.6%.

Rapidly increasing return on equity (ROE)

One of the biggest bits of help for Westpac could be the improvement in profitability thanks to the higher lending profits. This can help the Westpac share price as well.

An increasing return on equity (ROE) can make the business a lot cheaper.

My colleague James Mickleboro recently reported on comments from Morgans about the compelling situation for Westpac:

We view WBC as having the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful. The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book. Yield including franking is attractive for income-oriented investors, while the ROE improvement should deliver share price growth.

Westpac share price snapshot

Despite the interest rate environment looking more favourable for bank profitability, the Westpac share price is down 3% over the past year.

The post 2 reasons why the Westpac share price is cheap appeared first on The Motley Fool Australia.

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More reading

• These ASX 200 dividend shares are top of Macquarie’s income portfolio
• Expect big yields from these ASX 200 dividend shares in 2023 and 2024: brokers
• Did you buy $5,000 of Westpac shares 5 years ago? If so, here’s how much dividend income you’ve earned
• Should I buy Westpac shares following the ASX 200 bank’s latest earnings update?
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool Australia has recommended Westpac Banking. 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 Woolworths Group Ltd (ASX: WOW) share price will be one to watch on Wednesday.

That’s because the supermarket giant has just released its half-year results and reported strong earnings growth.

Woolworths share price following results release

• Sales up 4% to $33,169 million
• Earnings before interest and tax (EBIT) up 18.4% to $1,637 million
• Net profit after tax up 14% to $907 million
• Fully franked interim dividend up 17.9% to 46 cents per share

What happened during the half?

For the six months ended 31 December, Woolworths reported a 4% increase in sales to $33,169 million.

This was driven by a 2.4% increase in Australian Food sales, a 17.4% jump in Metro Food sales, a 15.3% lift in Big W sales, and a 23% jump in Australian B2B sales, which offset weaker sales in New Zealand Food and the WooliesX online business.

Woolworths’ key Australian Food business benefited from food inflation. It continued to rise during the half due to industry-wide cost pressures, with Q2 average price growth of 7.7%, marginally higher than Q1 growth of 7.3%. Long Life prices continued to increase but some Fruit & Vegetable prices moderated as supply improved.

The company’s EBIT grew at a much quicker pace of 18.4% to $1,637 million during the half. This reflects improvements in its cost of doing business (CODB) margin, which declined 29 basis points largely due to the non-recurrence of direct COVID costs of $239 million that were incurred in the prior corresponding period.

This ultimately led to Woolworths reporting a 14% jump in net profit after tax to $907 million, allowing the board to increase its dividend by 17.9% to 46 cents per share.

How does this compare to expectations?

The good news for the Woolworths share price today is that this result appears to have come in ahead of expectations.

According to a note out of Goldman Sachs, its analysts were expecting group sales growth of 3.5% and EBIT growth of 12%. The market was also expecting a fully franked interim dividend of 43.9 cents per share.

Woolworths has beaten on all metrics with 4% sales growth, 18.4% EBIT growth, and its 46 cents per share dividend.

Management commentary

Woolworths Group CEO, Brad Banducci, was pleased with the half. He commented:

Our first half result benefitted from a focus on improving our customer shopping experience, restoring our operating rhythm, the non-recurrence of material COVID costs in the prior year and strong seasonal trading. Despite continued supply chain challenges during the half, most customer metrics improved, with Customer Care a highlight and Group VOC NPS increasing on Q1 and the prior year.

Cost-of-living pressures are being felt by our customers due to industry-wide inflation and helping all our customers get their Woolies worth remains our number one priority. A focus on affordability and availability, and an inspirational Christmas resulted in Group H1 sales growth of 4.0% (3-yr CAGR: 7.5%) and EBIT growth of 18.4% (3-yr CAGR: 7.1%).

Outlook

More good news for the Woolworths share price today is that the company has had a strong start to the second half. During the first seven weeks of the half, the company has achieved the following sales growth:

• Australian Food sales up 6.5%
• New Zealand Food sales up 6.3%
• Big W sales up 9.7%

And while the company’s earnings are not expected to grow as strongly in the second half, a solid full year result appears to be on the cards. Mr Banducci concluded:

In summary, sales momentum has continued to be solid in the half to date and the operating rhythm of our business continues to improve. However, EBIT growth in H2 will be below H1 as we cycle a more normal second half. We will continue to balance the needs of all our stakeholders, including providing our customers with great value; treating our suppliers fairly; offering competitive pay and a positive working environment for our team; continuing to play our part in creating a better tomorrow; and delivering sustainable financial results for our shareholders.

The post Woolworths share price on watch amid first-half earnings beat appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Own Woolworths shares? Here’s what the market is expecting from its half year results
• Buy Woolworths shares today for 15% upside plus passive income: Goldman
• These ASX 200 shares are buys: experts
• With interest rates heading higher again, the risk is to the downside for these popular blue chip ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Coles Group Ltd (ASX: COL) share price has risen strongly so far in 2023, up around 10%. With its dividend increasing significantly in the company’s FY23 half-year result, should it now be considered one of the best S&P/ASX 200 Index (ASX: XJO) dividend shares?

Although it’s early in 2023, we’ve already seen some large dividend cuts from some of the ASX’s biggest dividend payers.

In the Fortescue Metals Group Limited (ASX: FMG) FY23 half-year result, the dividend was cut by 13% to 75 AU cents per share.

The BHP Group Ltd (ASX: BHP) dividend just took a massive dive in the HY23 result, dropping by 40% to 90 US cents per share.

Certainly, Coles reported much better numbers for income-focused shareholders.

Coles shares to pay enlarged dividend

The supermarket business reported that its sales increased 3.9% to $20.8 billion and earnings per share (EPS) from continuing operations went up 11.6% to 46.3 cents.

This enabled the board to have the confidence to increase the interim dividend by 9.1% to 36 cents per share.

Added to the FY22 final dividend of 30 cents per share, that means the current annualised dividend is 66 cents per share.

At the current Coles share price, the business has a grossed-up dividend yield of 5.2%.

While that’s not the biggest dividend yield out there, the annual dividend per share has steadily grown since 2019.

Indeed, the Coles dividend grew faster than inflation at its supermarkets. FY23 half-year inflation was 7.4% at its supermarkets, with an inflation rate of 7.7% in the second quarter.

Is it one of the best ASX 200 dividend shares around?

The Coles share price has generally trended higher over the past five years, along with earnings steadily rising.

When looking at other major ASX 200 dividend shares, such as Commonwealth Bank of Australia (ASX: CBA) and BHP, both of those big names have seen a dividend cut since the start of the COVID-19 pandemic.

As I mentioned, Coles kept increasing its dividends during that time.

So, the supermarket business has achieved an impressive level of consistency, even if the major ASX 200 dividend shares like mining shares and bank shares started with higher dividend yields.

I think that Coles is doing all the right things to improve its financials and grow the business.

The banks and miners are capable of producing good returns, but I think it only makes sense to buy such big businesses when they are going through a weak point in the economic or commodity cycle, rather than at their current position of strength.

While there are a few other ASX 200 dividend shares that could make an even stronger case, I believe Coles has cemented itself as one of the leaders when it comes to generating passive income.

The post Is Coles now one of the best ASX 200 dividend shares? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• 3 ASX 200 stocks falling hard on results announcements
• 2 ASX 200 consumer shares tumbling lower on earnings updates

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group. 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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