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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.

Despite posting solid advances on Friday, stock markets were down last week, and all the same worries investors have had are still largely present. Midterm elections on Tuesday will draw attention, but the focus seems to remain on the Federal Reserve and broader macroeconomic pressures. In premarket trading, futures contracts on the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) were slightly higher, as investors seem to hope that things will turn out favorably.

Making news over the weekend was Warren Buffett, whose Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) reported its third-quarter financial results on Saturday morning. As was widely expected, the Oracle of Omaha did prove vulnerable to the bear market. However, its stock was up in premarket trading on Monday, and a closer look at the underlying businesses held within the insurance-focused conglomerate could leave you with a good feeling about Berkshire’s prospects.

Losses for Berkshire — with a caveat

It’s easy for those who aren’t familiar with Berkshire Hathaway’s accounting requirements to draw the wrong conclusion from a quick glance at the insurance giant’s headline numbers. Berkshire posted a net loss of $2.69 billion during the third quarter, bringing its year-to-date losses to a staggering $40.98 billion.

Yet Berkshire is required to mark its investments and derivatives to market on a quarterly basis. This has the impact of adding huge gains during bull markets, but when the value of those investments goes down — as has happened in 2022 — it results in massive charges against earnings. Indeed, those investments and derivatives cost Berkshire $10.45 billion in the third quarter and a whopping $65.07 billion in the first nine months of the year.  

Buffett would probably suggest that looking at realized gains and losses would make more sense. Berkshire didn’t have a perfect track record there, with net realized losses of $378 million in the third quarter and $946 million in the first nine months of 2022. However, that at least reflects investment decisions that Buffett and his team made rather than the simple day-to-day fluctuations of share prices.

The rest of the story

To understand Berkshire fully, the best place to start is with the operating earnings of its subsidiaries and major ownership holdings. There, you can get a better picture of the forces affecting the company’s overall fundamental performance. Doing that yields some interesting insights:

• Berkshire’s insurance units posted a $962 million underwriting loss for the period. That was worse than in the year-earlier quarter, showing the impact of higher catastrophic losses that other insurers have also seen.
• At the same time, though, rising interest rates played a part in boosting the amount of investment income Berkshire’s insurance-related assets generated. The 21% year-over-year rise to $1.41 billion was enough to offset higher underwriting losses.
• Berkshire’s major cyclical subsidiaries had mixed performance. The BNSF railroad unit saw operating earnings ease lower by roughly 6% to $1.41 billion, but the utility and energy businesses saw a similar-sized rise year over year to $1.59 billion. The performances of the two areas basically canceled each other out.
• The strongest absolute gains came from Berkshire’s other controlled businesses, with operating earnings there climbing by more than half a billion dollars to $3.25 billion.

In addition, Berkshire noted that its use of foreign currency-denominated debt yielded gains due to the strong U.S. dollar, adding $679 million to operating earnings for the quarter.

Overall, operating earnings rose 20% in the quarter to $7.76 billion, and year-to-date figures have seen almost exactly the same growth rate. That suggests that Berkshire Hathaway’s core businesses are still as healthy as ever and well positioned to deal with the unique challenges of this particular bear market. 

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

The post Berkshire, Buffett feel the bear’s bite appeared first on The Motley Fool Australia.

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• Why I think Warren Buffett is right to always think a market crash is coming
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Dan Caplinger has positions in Berkshire Hathaway (B shares). The Motley Fool has positions in and recommends Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). 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.

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

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In afternoon trade, the Lake Resources N.L. (ASX: LKE) share price has given back its morning gains and slipped into the red.

At the time of writing, the lithium developer’s shares are down over 1% to $1.13.

Why is the Lake Resources share price falling?

Investors have been selling down the Lake Resources share price this afternoon following the release of another short attack from J Capital.

According to the release, the investment firm has secured information from the United Kingdom that paints a very different picture to an announcement from August 2021 relating to potential funding from the UK Export Finance (UKEF).

That announcement was titled “Strong Expression of Interest to Fund Project to approximately 70% of total Kachi Project funding requirements.”

However, J Capital alleges that UKEF was not a fan of the announcement.

What is J Capital saying?

Below are a few key paragraphs from J Capital’s update:

We made a Freedom of Information Act (FOIA) application to the UK government to verify Lake Resources’ (Lake) claim that it has “confirmed” funding from UK Export Finance (UKEF). These documents seem to reveal that Lake has made statements that are incorrect about the expression of interest (EOI) from UKEF. UKEF says that Lake is just at the start of the application process.

Lake claims the EOI from UKEF provided in August 2021 “considerably de-risks the project.” A cache of documents released by UKEF under the FOIA request shows a conflict between the information Lake presents to the market and UKEF’s view of the EOI supporting the project.

UKEF appears to be critical of Lake’s press release for characterizing the EOI as a “strong” expression of interest and has instructed Lake not to say that the EOI is an endorsement of the Kachi project’s ESG benefits. The same cache of documents takes issue with a Reuters article quoting then-Managing Director, Stephen Promnitz saying the UKEF “really liked the ESG benefits of Kachi.” In respect to this, the UKEF has said “Lake should refrain from inferring a statement from UKEF”.

J Capital also highlights that despite the above, Lake Resources stated in its annual report that there is a 100% probability that its Chairman, Stu Crow, will receive 5 million performance rights that are dependent on signing finance agreements for the project. It adds:

Unless there have been some recent undisclosed developments, Lake is aware the financing from UKEF is not “confirmed” and yet, despite this, they have made provision for Mr Crow to receive the performance rights that have now vested.

Lake Resources has not yet responded to the report.

The post Lake Resources share price dips amid latest short-seller attack appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today 
• Could this help turn a corner for the Lake Resources share price?
• The Lake Resources share price leapt 18% in October. Here’s what drove the ASX 200 lithium share higher
• Here are the top 10 ASX 200 shares today
• Why Atlantic Lithium, Coronado Global, Lake Resources, and Rio Tinto are charging higher

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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It’s looking like another strong start for the S&P/ASX 200 Index (ASX: XJO) so far this Tuesday. At the time of writing, the ASX 200 has added a healthy 0.25%, taking it to over 6,950 points. But there’s a whole other party going on with the Core Lithium Ltd (ASX: CXO) share price.

Core Lithium shares did not look like they were going to join in the ASX 200 party this morning. In fact, this ASX lithium stock got down to around $1.44 a share soon after market open. But following this dip, Core Lithium shares spiked. The lithium producer has now risen to $1.50 a share at the time of writing, up a healthy 3.1% for the day.

So what’s going on here?

Why is the Core Lithium share price all over the place today?

Well, what we do know is that it has absolutely nothing to do with anything out of the company itself, seeing as Core Lithium hasn’t put out any official ASX news since 4 November.

However, we have also seen some volatility with some of the other ASX lithium stocks’ share prices today.

Sayona Mining Ltd (ASX: SYA) shares have been bouncing around all day, with stints in both positive and negative territory. It’s presently up by 0.83% at 24 cents a share.

Pilbara Minerals Ltd (ASX: PLS), on the other hand, has had a very strong day indeed. The leading ASX lithium producer’s shares have gained a rosy 3.94% today, putting the company at $5.40 a share.

Liontown Resources Limited (ASX: LTR) is another lithium share that has seen some bouncing around today. The company is currently up a pleasing 2.88% at $1.96 a share. But today has seen Liontown go as high as $1.99 and as low as $1.94.

So it’s been a pretty wild ride for most ASX lithium stocks today, including for the Core Lithium share price. That’s despite no real news from any of them. But this is not exactly unusual these days, so perhaps we’ll see more moving and shaking throughout the week.

The post Why is the Core Lithium share price spiking 3% today? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Monday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most traded ASX 200 shares on Friday
• Which is the better ASX buy, Allkem or Core Lithium shares?
• Here are the 3 most traded ASX 200 shares on Thursday

Motley Fool contributor Sebastian Bowen 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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There are a lot of S&P/ASX 200 Index (ASX: XJO) shares. Their share prices are changing all the time. But how are we meant to know which ones are an opportunity?

Well, we can certainly do our own evaluation and decide if the potential opportunity is good value. But, we can also get an indication from leadership if they decide to buy shares of their own businesses.

Leadership can decide to sell for a number of different reasons – diversification, paying for tax, buying a home and so on.

But, there may be one key reason for buying – the director thinks the business has a good future and they believe that it’s at a good price to buy.

Let’s have a look at which ASX 200 shares have been getting a vote of confidence from their directors.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is the parent business of a number of Australia’s most recognisable retailers including Bunnings, Kmart, Officeworks, Priceline, Target and Catch. It also has a number of industrial businesses, as well as a lithium mining project.

Last week, it was announced by Wesfarmers that director Mike Roche bought 1,500 more Wesfarmers shares at a price of $44.94 per share. So, this investment has already made a small gain on the initial $67,000 purchase. It was an on-market trade.

The superannuation fund that this investment was for, now has a total holding of 4,560 shares. So, in percentage returns, it was a significant increase of the holding.

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel Management is one of the world’s largest corporate travel companies, helping business people get where they need to be as efficiently as possible.

Director Marissa Peterson is the latest leadership figure to be involved with buying shares of the ASX 200 share.

She decided to buy a total of 10,000 Corporate Travel Management shares at a price of $18.10 per share. This means the total investment cost was $181,000. This investment represents her total holding. It was an on-market trade.

Reliance Worldwide Corporation Ltd (ASX: RWC)

This business says that its portfolio of brands “transform performance and efficiency for plumbing and heating, smart homes and specialist industries around the world.”

The latest director investment was by Darlene Knight who bought 27,000 shares for a total cost of $82,620, which works out to be a price of $3.06. This was an on-market trade.

That brought the total holding to 37,000 shares.

The post 3 ASX 200 directors buying up their company shares in the past week appeared first on The Motley Fool Australia.

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More reading

• Do Wesfarmers shares really offer 22% upside AND growing dividends?
• Morgan Stanley tips how to pick the market bottom, but should you wait to buy ASX shares?
• Experts name 2 ASX 200 dividend shares to buy next week
• Goldman Sachs says these ASX travel shares are buys
• Should you buy the dip in the Wesfarmers share price?

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 Reliance Worldwide Corporation Limited. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Corporate Travel Management Limited and Reliance Worldwide Corporation Limited. 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 Medibank Private Ltd (ASX: MPL) share price is currently down 3.2% to $2.74.

The S&P/ASX 200 Index (ASX: XJO) health insurer is again making headlines today for the massive data breach it suffered on 12 October.

Cybercriminals managed to access the name, date of birth, address, phone number and email address of 9.7 million current and former customers. The hackers also accessed health claims data for some 480,000 customers.

Yesterday the Medibank share price closed higher after the company said it would not pay any ransom to the hackers.

Why is the Medibank share price under pressure today?

The renewed pressure on the Medibank share price looks to be coming from two fronts: its disgruntled customers and the hackers.

On the hacking front, the purportedly Russian hackers have threatened to publish the stolen data of all the customers unless their demands are met.

As The Australian reports, the hackers have urged people to sell their Medibank shares, while delivering this threat, “A man who has committed a mistake and doesn’t correct it is committing another mistake. –Confucius… Data will be publish in 24 hours.”

In separate headwinds for the Medibank share price, the health insurance giant is facing a class action suit, as The Motley Fool reported here earlier today.

Bannister Law Class Actions and Centennial Lawyers have stated that they will jointly investigate the cyber breach.

“The lawyers will also assess whether damages should be paid to Medibank customers as a result of their breaches,” Bannister said.

How has Medibank been tracking?

The Medibank share price has yet to recover from the sharp sell-off the company faced following the hacking attack in October.

With today’s intraday losses factored in, shares are down 20% year to date. For some context, the ASX 200 is down 8% in 2022.

The post Medibank share price slides following latest blows from hackers and customers appeared first on The Motley Fool Australia.

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More reading

• Medibank share price on watch amid class action and new data threat
• Medibank share price lifts on cyberattack ransom update
• Here are the top 10 ASX 200 shares today
• ‘Close to bottom’: Expert names 3 bargain ASX shares to buy right now
• Here are the 3 most traded ASX 200 shares on Wednesday

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 Vanguard Australian Shares Index ETF (ASX: VAS) is the most popular exchange-traded fund (ETF) on the ASX. And by a mile too. Investors seem to love the whole-market exposure that this fund from Vanguard provides.

Covering the whole ASX (well, the top 300 companies on the ASX) gives investors in this ETF many advantages. You have massive diversification, with capital spread across 300 individual companies).

There’s also the comfort of knowing that you’ll get the market’s rate of return, no more, no less. And the Vanguard Australian Shares ETF’s management fee of 0.1% is relatively low for an exchange-traded fund by ASX standards.

But what of dividend income? Can investors in this ETF expect some healthy cash flow as well from this investment?

How often does the Vanguard Australian Shares ETF pay dividends?

Well, the answer is yes. The Vanguard Australian Shares ETF does indeed pay out dividend distributions to its investors. And regularly so.

Any ETF that owns a dividend-paying share has to pass on the income received to its investors. So Vanguard’s massive portfolio of dividend payers is a big advantage here.

On the ASX, it is the norm to pay out dividends bi-annually, or every six months. But this fund takes this a step further. Investors in this ETF typically enjoy a dividend distribution every three months. Paying out income quarterly is obviously an advantage for lovers of dividend income, so no doubt this is appreciated by investors.

Let’s see what this looks like in practice.

So the Vanguard Australian Shares ETF has indeed paid out four dividend distribution payments over the past 12 months. The latest of these came just last month, a payment of $1.45 per unit, covering the three months to 30 September 2022.

Before that, we had a $2.16 per unit distribution, a $2 per unit distribution and a 6965 cents per unit payment.

That all adds up to a trailing annual total of approximately $6.30 per unit.

On today’s Vanguard Australian Shares ETF pricing of $86.43 (at the time of writing), this gives the fund a trailing distribution yield of 7.29%.

The post How regularly does the Vanguard Australian Shares ETF (VAS) pay dividends? appeared first on The Motley Fool Australia.

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More reading

• Is the Vanguard Australian Shares ETF fighting off inflation?
• Why did the Vanguard Australian Shares Index ETF perform strongly in October?
• 2 excellent ETFs for ASX investors in November
• Here’s how the Vanguard Australian Shares ETF (VAS) stacks up against the BetaShares Australia 200 ETF (A200)
• 5 things I look at when buying an ASX ETF

Motley Fool contributor Sebastian Bowen 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 Westpac Banking Corp (ASX: WBC) share price is bouncing back on Tuesday.

At the time of writing, the banking giant’s shares are up 2% to $23.65.

Why is the Westpac share price rebounding?

The Westpac share price is rising today after a number of brokers retained their buy ratings on the bank’s shares.

For example, after running the rule over the bank’s full year results, the team at Citi has retained its buy rating and $30.00 price target and analysts at Morgans have retained their add rating with a trimmed price target of $25.80.

Elsewhere, over at Goldman Sachs, its team has reiterated its conviction buy rating with an improved price target of $27.60. Based on the current Westpac share price, this implies potential upside of almost 17% for investors.

Goldman has also lifted its dividends per share forecast for FY 2023 to 148 cents. This represents a fully franked 6.25% dividend yield at current levels.

What did Goldman say?

While Goldman wasn’t blown away by Westpac’s margin leverage in FY 2022 and notes that its cost base target has been increased, it remains very positive. This is largely due to the valuation of the Westpac share price and its margin outlook. It explained:

We remain Buy (on CL) rated on WBC given: i) while on the surface, the FY22 result suggested WBC’s NIM leverage was underwhelming relative to some peers, we think 2H22 was adversely impacted by late-in-the-half liquidity build, and management’s guidance on its FY23 NIM trajectory was better than we had previously anticipated, ii) despite WBC revising its FY24E cost target to A$8.6 bn (from A$8.0 bn), the bank’s performance on cost management remains strong in this inflationary environment with a 9% step down in costs expected over the next two years, and iii) the stock is trading at a 22% 12-month forward PER discount to peers (ex-dividend adjusted; historically has traded at a 2% discount), and our revised TP of A$27.60 offers 25% [now 23%] TSR.

The post Is the Westpac share price in the buy zone post-results? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Are ASX 200 bank shares a no-brainer buy in an inflationary environment?
• Why ANZ, Coronado Global, Eclipx, and Westpac shares are dropping
• Why is the Westpac share price dropping 4% today?
• Everything you need to know about the latest Westpac dividend

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 Westpac Banking Corporation. 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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Appen Ltd (ASX: APX) shares are up 2% in morning trade, having opened 2.5% higher.

This will come as welcome news to shareholders in the beleaguered artificial intelligence data services company.

Appen shares have come under heavy selling pressure this year alongside some of its biggest customers and revenue earners, like Alphabet Inc. (NASDAQ: GOOGL) and Meta Platforms Inc (NASDAQ: META).

Or Google and Facebook, to you and me.

The Meta share price is down a whopping 71% this calendar year, while Alphabet’s shares have plunged 39%.

Little wonder then that the Appen share price has also been in freefall.

But there may be a light at the end of the tunnel for the ASX tech stock’s shareholders.

Why the picture could be getting brighter

With Appen’s share performance significantly impacted by the outlook for the big US tech stocks, Julian Emanuel, senior managing director at Evercore ISI, offers a fairly bullish forecast.

Emanuel said investors shouldn’t conflate this year’s tech woes with the dotcom-bubble burst in 2000, indicating the tech sector will rise again.

According to Emanuel (quoted by Bloomberg), “This is not like 2000. Over the last 10 years we have gotten to this point where the returns were driven by a handful of stocks.”

The handful of stocks in question include Meta and Alphabet, part of the so-called giant tech FAANG stocks. (Though with the Facebook and Google name changes, the proper acronym would now be MAANA, not quite as catchy.)

Emanuel said the FAANG (or MAANA) stocks are likely to trade in a tight range from here until “earnings catch up to valuations”.

“Long-term, those are still secular growers; they’re just not going to prop up the market to the extent that they have,” he said, in what could prove to be good news for Appen shares down the road.

How have Appen shares been tracking?

Appen shares are down a painful 77% in 2022. For some context, the All Ordinaries Index (ASX: XAO) is down 10% year to date.

The post Could this imply light at the end of the tunnel for Appen shares? appeared first on The Motley Fool Australia.

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More reading

• Better big tech stock: Apple vs. Alphabet
• Appen share price sinks to another multi-year low despite new recruits
• Leading fund manager names the 3 ASX stocks that drove its returns higher in October
• Why Meta Platforms stock (finally) gained ground Tuesday
• Does the Vanguard International Shares ETF contain ‘good’ quality companies?

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 positions in and has recommended Alphabet (A shares), Alphabet (C shares), Appen Ltd, and Meta Platforms, Inc. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Meta Platforms, Inc. 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 Weebit Nano Ltd (ASX: WBT) share price is soaring on news the first silicon wafers integrating Weebit’s embedded Resistive Random-Access Memory (ReRAM) module have been delivered.

They were shipped from technology realisation partner SkyWater Technology (NASDAQ: SKYT)’s United States production fab.

Weebit Nano CEO Coby Hanoch said their arrival represents “a huge milestone towards commercialisation”.

The Weebit Nano share price is up 5.37% at the time of writing, trading at $3.14.

Let’s take a closer look at today’s news from the All Ordinaries Index (ASX: XAO) computer memory technology developer.

‘A huge milestone towards commercialisation’

The Weebit Nano share price is taking off today as the company takes a major step towards the commercialisation of its next-generation memory technology.

The manufacturing of Weebit ReRAM has been proven with standard tools and mature process flow.

The silicon wafers will now be sliced into chips and packaged before being tested and qualified.

The chips were manufactured in SkyWater’s 130nm CMOS process – already employed for billions of devices for automotive, industrial, and consumer applications.

They’ll be used in customer demonstrations, testing, and prototyping ahead of commercial orders and volume production. That will allow customers to begin designing system-on-chips using the modules.

Commenting on the news driving the Weebit Nano share price higher today, Hanoch said:

This increases the confidence of potential customers in our IP, pushing forward companies interested in engaging with us, and we’re seeing discussions with potential customers ramping up as we get closer to production.

The demo chips produced by SkyWater integrating Weebit’s ReRAM module are enabling these companies to see the true advantages our technology can provide.

SkyWater chief revenue officer Mark Litecky also commented:

We already see strong interest for the technology for applications including internet of things, power management, and mixed-signal integrated circuits.

Full qualification of the demo chips in SkyWater’s production fab is expected to be completed in the first half of 2023.

Weebit Nano share price snapshot

The Weebit Nano share price has been outperforming lately.

Today’s gains included, it’s 9% higher than it was at the start of 2022. Though, it has fallen around 2% since this time last year.

Meanwhile, the All Ordinaries Index has fallen 10% year to date and 8% over the last 12 months.

The post Weebit Nano share price leaps 5% on ‘huge milestone’ appeared first on The Motley Fool Australia.

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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 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 Sims Ltd (ASX: SGM) share price is having a day to forget on Tuesday and is one of the worst performers on the ASX 200 index.

In morning trade, the scrap metal company’s shares are down over 11% to $11.33.

At one stage, the Sims share price was down as much as 14% to a 52-week low of $10.97.

Why is this ASX 200 share crashing?

Investors have been hitting the sell button in a panic after the company released a dismal trading update ahead of its annual general meeting.

According to the release, the tough trading environment that the company highlighted in August has persisted throughout the first quarter of FY 2023.

The update reveals that lower scrap volumes resulting from significantly reduced economic activity, coupled with increased competition for available infeed, has tightened trading margins in both percentage and dollar per tonne terms.

In light of this, the company expects its first half underlying earnings before interest and tax (EBIT) to be in the range of $65 million to $75 million. This is a significant decline on the underlying EBIT of $361.7 million that it reported during the first half of FY 2022.

Furthermore, management has warned that there are shipments scheduled to occur close to the half-year end. In accordance with its revenue recognition policies, this has the potential to impact whether EBIT is attributed to the first half or second half.

This earnings decline comes despite the company implementing cost mitigation initiatives during the first quarter. The company notes that these have only partially offset inflationary pressures and costs are therefore expected to remain elevated in the second quarter. Further cost reduction measures are targeted for the second half.

Management commentary

Sims CEO, Alistair Field, remains confident on the company’s medium term outlook. He commented:

We believe these are short-term headwinds driven by macro-economic factors which do not alter our belief in, and our focus on, the medium-term outlook for the business.”

Having delivered strong earnings in the previous three financial halves, successfully transitioned from a regional to a functional organisation, added new and innovative acquisitions, and built significant growth in SA Recycling’s footprint, provides a solid platform to work towards the 2025 business goals.

I have every confidence that the fundamentals for metal recycling remain positive for the medium-term, with the decarbonisation of steel making, growth of EAFs, and the energy transition expected to continue driving demand.

The post Here’s why this ASX 200 share is crashing 14% on Tuesday appeared first on The Motley Fool Australia.

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More reading

• 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 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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