February 2022 Result Season: The Wrap

Feature Stories | Mar 07 2022

The February 2022 result season has proven to be the second best in the history of the FNArena Corporate Results Monitor, following a record February 2021. But that has done little to assuage investor sentiment.

-Second highest beats to misses in February 2022 season
-Supply challenges the season’s main feature
-Negative market sentiment
-Record cut to target prices

By Greg Peel

With the February result season now complete in 2022, the FNArena Corporate Result Monitor, which has been building throughout the month, is now complete and published in its final form here (see attached).

Guide

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 350 major listed companies covered by FNArena database brokers. By FNArena’s assessment, 151 companies beat expectations and 72 missed expectations, for a percentage ratio of 43/21 or 2.1 beats to misses. The aggregate of all resultant target price changes came in at a net -2.4% fall. In response to results, brokers made 56 ratings upgrades and 43 ratings downgrades.

The first FNArena Corporate Result Monitor was published in the August season of 2013. See table:

Unusual Times

One year ago, the February result season proved to be the “best ever” in terms of company results beating analyst expectations, compared to those missing. The beat-to-miss ratio came in at 3.7, compared to a previous high of 1.9 in August 2020 and a seven-and-a-half year average of 1.5.

From end-February to end-August 2021, the ASX200 rallied 13%. From end-August 2020, the rally was 24%. On the strength of those moves, it appeared another strong results season was in the offing.

By contrast, the December quarter 2021 saw the ASX200 rally all of 1.5%. The quarter began with NSW and Victoria in delta lockdowns, which were subsequently lifted during the period. State lockdowns/border closures came and went, except in Western Australia, where the border remained firmly closed.

While the February 2021 results season was the “best ever” in terms of the stats, it was in reality a somewhat misleading result due to four factors.


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