Feature Stories | Sep 09 2020
The August result season could be called “best ever” in terms of beats to misses, but in 2020, such a conclusion would be misinformed
-Guess and giggle forecasts
-Government support and cost cutting
By Greg Peel
With the August result season now complete in 2020, the FNArena Corporate Result Monitor, which has been building throughout the month, is now complete and published in its final form here (see attachment).
The table contains ratings and consensus target price changes along with brief summaries of the collective responses from FNArena database brokers for each individual corporate result, and an assessment of “beats” and “misses”. Australian corporate results tend to focus on the profit line, with all its inherent potential for accounting vagaries, tax changes, asset write-downs and other “one-off” impacts. FNArena has focused mostly on underlying earnings results (more in line with Wall Street practice) as a more valuable indicator of whether or not a company has outperformed or underperformed broker expectations. There is also a level of “quality” assessment here rather than simple blind “quantity”.
The Monitor summarises results from 318 major listed companies. By FNArena’s assessment, 114 companies beat expectations and 61 missed expectations, for a percentage ratio of 36/19 or 1.9 beats to misses. The aggregate of all resultant target price changes came in at a net 5.0% gain. In response to results, brokers made 54 ratings upgrades and 52 ratings downgrades, or an even enough ratio of upgrades to downgrades.
The attached PDF contains all this data and summaries of broker responses to every company reporting.
The first FNArena Corporate Result Monitor was published post the August season of 2013. See table:
Into the Darkness
Late last year, the ASX200 finally surpassed its pre-GFC high. The achievement took twelve years. It had taken Wall Street five. The ASX200 continued to rally into blue sky as we moved into 2020, peaking on February 17.
At that stage we were three weeks into the February reporting season, and to that point the season was shaping up as very positive. We all know what happened next.