Sectors: Utilities
Origin Energy (ORG) delivered a solid FY26 result in August, with underlying earnings (NPAT) 3% ahead of consensus, while FY27 guidance for Energy Markets was around 5.5% above expectations at the midpoint. New battery earnings are expected to offset much of the impact from softer near-term wholesale electricity prices while ORG’s overall cost base has been well managed in recent years which gives them a good platform to work with from here.
AGL +5.92%: delivered a broadly in-line FY26 result, but it was the FY27 outlook and better-than-feared dividend expectations that drove the stock. While headline FY27 EBITDA guidance is below prior consensus, expectations had already been cut significantly, and the combination of cost reductions, lower finance costs and a higher dividend payout provided some welcome relief.
AGL has been a soft performer over recent months, despite the company actually tightening FY26 guidance in a positive direction. We own AGL in the Income Portfolio, having bought the stock in February 2023, and while the recent share price weakness is frustrating, we think it needs to be viewed through the lens of what the market is now pricing in for FY27, rather than what the business is delivering in FY26.
Thank you all for your outstanding insights and suggestions. I have held ALX since before the takeover proposal. When the takeover proposal has landed, initially the stock price has jumped, but ever since it is going slowly backwards. Does this means that the market has little confidence in the proposed takeover succeeding or it may not reach the 45% threshold?
Regards,
John
Hi Team,
Origin makes money through its energy retail and integrated gas businesses. It sells electricity and gas to households and businesses, earning retail margins and wholesale generation income, while also holding a major stake in Australia Pacific LNG (APLNG), which generates earnings from domestic gas sales and LNG exports to Asia.
AGL +11.75: AGL shares jumped to their highest level in more than two years after delivering a steady 1H result in subdued wholesale conditions and announcing the sale of its telecommunications business to Aussie Broadband (ABB). The market had been cautious into the print, selling the stocks down in recent months, but today’s result should alleviate those concerns.
