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Highlights
Earnings season is set to start in August in Australia.
Over 2,000 ASX-listed firms would be announcing their full-year earnings.
In the first-half results, majority of companies had beaten the market expectations.
Australia’s earnings season is set to hit the deck in August when investors would keep their eyes peeled for full-year financial results of 2,000 odd ASX-listed companies. Investors would plan their future strategies keeping in mind the outlook shared by these firms.
In the first-half results, majority of companies had beaten the market expectations. But many experts believe things might be different this time around, thanks to surging energy costs, supply chain disruptions, interest rate hikes and geopolitical tensions. As a result, this leaves a lot of uncertainty in the domestic stock market.
Investors would be closely tracking shares of resources and energy companies after their earnings as these two sectors have put a damper on the market in the past few months.
Additionally, investors would also be interested in dividend payouts of companies this season amid the ongoing weakness in the market.
Here we look at three key points which all investors should be aware of.
Keep tabs on forecasts and reports
Every seasoned investor makes sure that he follows as many forecasts and analysts’ reports as possible. It helps them anticipate how a particular stock may end up performing before and after the company earnings are out. Experts draft these reports by employing the best possible fundamental analysis techniques and forecasting models.
Another point is not to limit yourself to any one or two brokerage reports and include as many varieties as possible. This way you can get a more holistic view on the stock.
Never judge a company by a single quarter
Experts always advise investors to have a broader view while devising their stock market strategies. Often who commit the mistake of judging a firm’s performance based on a single quarter. It is not possible to evaluate the company’s performance based on a single earnings season. Investors are in fact advised to keep a track of a company’s averages sales and earnings per share (EPS) growth over the quarters.
It has generally been seen that a stock become more volatile following its earnings announcement. But it may be a short-term reaction to the announcement and the share may soon regain its lost value.
Don’t rush to sell if company misses expectations
In case a company misses market expectations, many investors go into a panic mode and rush to sell their stocks. However, in such circumstances, investors should be calm as per experts. They should closely look at why that particular company missed its target. It is better to closely look at analysts’ consensus numbers and avoid knee-jerk reactions.
