As of 20 August, 45% by number and 68% by market cap of Australian stocks have reported their full year results for August 2021 company reporting season.
Results and revisions coming in above expectations
As per our predictions in our reporting season lead-in blog, reported results versus consensus expectations have been very strong, with 44% of companies beating the street on earnings per share (EPS), with just 27% surprising on the downside.
These results, combined with better (than we feared) company outlooks, have produced strong forward earnings upgrades for sales, earnings, and dividends.
Strong results, combined with better (than we feared) company outlooks, have produced strong forward earnings upgrades for sales, earnings, and dividends.
With cash to splash, we are seeing a significant number of capital management and merger and acquisitions announcements.
Other thematics to keep a watch on
The best overall results in terms of the stock price movement since reporting (‘alpha season’) and our ‘Reporting Score’ metric, which combines Surprise, Revisions, Price Reaction, have come from the P&C insurers such as QBE Insurance Group and Suncorp. The insurers are inextricably linked to the recovery theme.
On the flip side, the worst results have come from the Utilities/Energy (AGL Energy, Beach Energy, Origin Energy etc.) and Miners (BHP, Mineral Resources etc.) on lower commodity prices.
Other key themes that are emerging from the results include Paris Net Zero alignment, cost inflation (in particular, resources), the resilience of the consumer, and how companies are positioning themselves for the COVID-normal recovery.
In terms of the current lockdown conditions across 60% of the Australian population, in the discussions we have had with company management so far, they have described how resilient the economy is and how quickly earnings have recovered after each lock-down.
Things appear to have remained surprisingly sound through this lockdown to date, but when pushed, most then say they don't know what happens next if this keeps going… The vaccine rollout remains an important hinge-pin for future results.
As the reporting season continues to unfold, our analysts will have conducted over 100 meetings with management teams of Australian corporates.
In late September, we will publish our usual semi-annual Reporting Season Wrap, which will bring together our full statistical framework, and key fundamental views and insights from company engagement on these themes, and our outlook for a COVID-normal Australian market.