Reporting season is over for another year and as always there were plenty of talking points. As has been expressed a number of times now, Stockopedia is a wonderful resource during this enlightening time of year.
Broad themes:
Across the board it would appear that profit expectations for FY24 are pulling back. Depending on which consensus source you use, profit expectations have eased by some 5% - 8% for the broader market.
This is likely due to a combination of higher interest rates, the rising cost of doing business, the impact of a more cautious consumer and of course what is happening out of China (especially for our non-Gold miners)
As expected margins were the big issue with many companies recording sales growth, however not able to curtail costs that are still rising and unlikely to abate soon.
Unlike the US quarterly earnings season where there were a majority of beats vs misses (refer to the Momentum Monday articles for more commentary) we had a more even spread of stocks that either beat or missed expectations.
The XJO (ASX200) fell over the month of August by 1.4%. This compares to Small Ordinaries (ASX300 minus the top 100) which fell 1.5%. Either way, this was a relatively fair reflection based on what we saw. Dividends would also have helped investors in the big end of town.
XJO vs XSO (August 2023)
All these points have been covered extensively in other forms of media, so we now look to the StockRanks to see how they moved this latest earnings season and we chose to focus on the ASX200. Why? Because they often contain more complete data sets, are better covered by analysts and the vast majority of investors have their portfolios made up with these names. You can of course monitor every stock within the program to see how they moved, but for the purposes of this exercise we will stay with the bellwethers.
It is of course important to remind you that having a list of companies that either beats or misses expectations is just the market behaving normally. Therefore we can often put too much emphasis on specific moves (especially the negative ones). Our job as money managers is to try to get the odds in our favour,…
