Get ready folks for the greatest show on earth. Twice a year, around the second full moon following the solstice, they start to appear early in the morning, first in ones and twos, but eventually you’ll see dozens at a time.
No, it’s not mating season for the Tasmanian Trout-tickling Turtle, it’s reporting season.
This is not a Tasmanian Trout-tickling Turtle (they don’t actually exist).
Over the next couple of weeks most ASX-listed stocks will be reporting their half-year or full-year results and we’ll be covering the biggest, the best and the most interesting on Intelligent Investor Share Advisor.
The excitement is not misplaced, even for us dull value-investing types – in fact perhaps especially for us, as it gives us the freshest numbers upon which to base our calculations.
Juices flowing
Of course reporting season also gets the juices flowing with some big share price movements. Don’t be fooled by the sometimes steady state of the market at this time of year, there’s always plenty going on with individual stocks, it’s just that they often cancel each other out.
What matters of course is not the actual quality of the results, but how they’re perceived compared to what was expected.
The recent run-up in share prices tells you that expectations are higher than their uber-depressed levels a few months ago and the key question will be whether companies can support this renewed faith with an earnings improvement, or at least a better than expected statement on the outlook.
Off to a flyer
Some of the early starters have got things off to a flyer.
JB Hi-Fi leapt earlier this week because net profit growth of 3% was better than most expected and management didn’t give a completely abject view of the future: ‘Sales growth may be more challenging [in the second half], but this should be offset by a relatively stable gross margin environment,’ said chief executive Terry Smart. It’s not exactly all beer and skittles, but it was enough to send the market’s most shorted stock up 17%.
Commonwealth Bank’s result yesterday was instrumental in powering the ASX 200 past the less-important-than-everybody-seems-to-think 5000 mark, sending CBA up more than 2% and the rest of the banking sector with it. As Nathan Bell explains: “Virtually every metric in the result was pointing in the right direction; even customer satisfaction levels are way up.”
CSL also served up yet another excellent result, but so much is expected of this company now that it’s shares barely moved.
Cochlear, meanwhile, went the other way. Investors have been steadily pricing in a return to its glory days over the past year or so, but a messy half-year result hinted that it might be losing market share and the market punished the stock with a 9% fall.
Telstra’s mixed bag
Meanwhile Telstra presented a mixed bag, with mobile growth making up for fixed-line declines. The company has been making great strides recently, in becoming more nimble and customer focused, although much of that improvement is already reflected in a higher stock price. We’ve made our review on Telstra free to non-members for those that are interested.
These are just some of the highlights so far, but there will be many more, and in amongst all the ups and downs there are sure to be opportunities for disciplined value investors.
Members can access all our reviews over on the Intelligent Investor Share Advisor website. If you’re not a member and are yet to take out a free trial, now would be a great time to do so.