Despite this modern age of real-time communication, there is still significant anticipation (and nervousness) for what might be uncovered during reporting season. Forewarned is forearmed during this crucial time for DIY investors, so be prepared with this checklist for when the numbers drop.
1. Know when your companies will report: Just like preparing for exams, it is best you focus your immediate attention on those businesses due to report first, as focusing on late reporters may avert your attention from more pressing concerns.
To help you with this we have compiled a report calendar for this season.You can click here in order to read it. Note: We have compiled this list ourselves so if you notice a glaring omission please let us know.
For more obscure cases, be sure to look for this information within companies’ investor relations pages or within any recent announcements. If no normal date is provided, use the previous year as a guide. Very rarely do companies differ too much in terms of timing year-on-year
2. Research Estimates: Though ignored by sceptics, now is a critical time to pay attention to earnings estimates. In most cases this will be an annual report, meaning an analyst can only get 6 months wrong as interims have been reported.
Thus far consensus estimates are for flat earnings in FY23. Despite downgrades outstripping upgrades this confession season, the market has already been normalising estimates over the past three months. Look for margin compression as the most worrying sign. Margins are the profit compounder, so without them, irrespective of where revenue sits, things will be a challenge.
Look for stocks that have seen upgrades since their last report as that is the best indicator the the “market view” on the business has been improving.
Positively, most analysts underestimate expected earnings so as to avoid being disastrously incorrect. Look at the US example, currently they are seeing more beats than misses and all this supports the market rally during what is expected to be the worst earnings results since the depths of COVID.
4. Know the Industry Trends and current macro environment: Understanding the broader trends in the industry and economy can help you prepare for…
