AUS
NZ
UK
CA
USA
IND
Nowadays, every listed company is providing earnings guidance, which is nothing but management comments about what the company expects to earn in the future. The management also talks about the company’s long term and short-term goals in the guidance. These earnings guidance can be considered as one of the sources of information based on which a buy or sell call can be taken. An earnings guidance is an objective view of company’s future performance, which is exposed to many risks and uncertainties. Let’s have a look at three companies that have provided their earnings guidance.
Steadfast Group Limited (ASX:SDF)
Steadfast Group Limited (ASX: SDF) Reports Stellar Growth
Steadfast Group Limited is a general insurance broker network in Australia and New Zealand and is engaged in the provision of services to Steadfast Network Brokers, the distribution channel for insurance policies through insurance brokerages and underwriting agencies and related services.
The company delivered 32% growth in gross written premium (GWP) to $3.9 billion in 1H20. This was driven by new IBNA brokers joining the network, continued growth in authorised representative networks and organic growth of 6.5% across the portfolio.
Robust growth in underlying EBITA
The company’s EBITA grew by 27.5% to $108.9 million mainly led by following factors:
- The organic growth influenced $5.5 million of the growth in 1H20 which was driven by the Group’s equity investments in brokers and a strong performance by the underwriting agencies;
- Acquisition growth contributed $16.3 million of the growth in 1H20;
- $2.6 million (after tax incidence) mark-to-market revaluation of Johns Lyng Group (JLG) investment.
Q
Strong Underlying Earnings Growth (Source: Company’s Report)
Guidance for FY20
The company has confirmed top end of FY20 underlying EBITA and NPAT guidance and an upward revision in underlying EPS growth to 10% to 15%. The guidance for full year 2020 is given below:
- Underlying EBITA to lie between $215 m and $225 m;
- Underlying NPAT to range between $100 m and $110 m;
- Underlying diluted EPS (NPAT) growth rate in between 10% and 15%.
Major Acquisitions to Drive Future Growth
During the six months period, the company acquired IBNA Limited (IBNA). It is an Australian general insurance broker network with 78 brokerages generating about $1.25 billion of GWP annually. This transaction impacted $4.3 million to underlying EBITA growth in 1HFY20. The final acceptance rate across the network was marginally above 70%. This transaction contributed $5.7 million to the underlying EBITA growth. Further business acquisitions within the network contributed $6.3 million to underlying EBITA growth in 1HFY20.
Stock Performance
The stock of SDF last traded at $3.790 per share, on 26th February 2020, down by 3.562% from its previous closing price, with a market capitalisation of $3.39 billion. It’s 52-week low and high are $3.020 and $4.100, respectively, while the total outstanding shares of the stock stood at 863.21 million. The stock of the company has given a return of 13.91% and 5.65% in the time period of 3 months and 6 months respectively.
AMA Group Limited (ASX: AMA) Reports Disappointing Results
AMA Group Limited is focussed on the wholesale vehicle aftercare and accessories market, including panel repair shops, automotive and electrical components, vehicle protection bull bars and other servicing workshops for brakes and transmissions.
For the half year ended 31 December 2019, the company reported statutory net loss of $12.27 million, down by 221.7% from prior year’s profit of $10.08 million. Statutory EBITDA was up by 24% to $29.6 million. This loss reflects the current challenging market conditions which has seen declining repair volumes, pressure on pricing and the costs associated with new vehicle technologies such as Advanced driver-assistance systems (ADAS). The automotive parts and accessories division has also been impacted by a pronounced year-on-year decline in new car sales, impacting the industry. The reported revenue from continuing operations has increased from $298.1 million to $396.1 million, representing a 33% increase from the year-ago period.
Outlook for FY20
The company believes that there are still significant growth prospects for both the vehicle panel repairs division and automotive parts and accessories division. The amalgamation in the vehicle panel repair industry is likely to lead the industry and continue to expand the scale of operations of the company. The economic stance and market circumstances around some business units are likely to remain difficult. Current strategies based on the merging of the panel repair division, increasing strategic partnership agreements with important suppliers and customers, exploring industry innovation aimed at operational efficiencies and ongoing cost management initiatives are expected to deliver earnings growth and improve shareholder value. AMA expects to deliver a normalised EBITDAI for FY2020 in the range of $73.0 million to $77.0 million.
Stock Performance
The stock of AMA last traded at $0.590 per share, on 26th February 2020, down by 24.359% from its previous closing price, with a market capitalisation of $570.58 million. It’s 52-week low and high are $0.457 and $1.512, respectively, while the total outstanding shares of the stock stood at 731.51 million. The stock of the company has given a return of -36.07% and -40.33% in the time period of 3 months and 6 months respectively.
Woolworths Group Limited (ASX:WOW) Reports Satisfactory Results Despite Challenging Environment
Woolworths Group Limited (ASX:WOW) is engaged in the business of general merchandise, food and speciality retailing through chain store operations.
Despite a volatile trading environment, all businesses delivered sales and earnings growth in 1H FY20. Sales derived from continuing operations increased 6.0%. EBIT derived from continuing operations before significant items increased by 11.4%.
In Australia food, EBIT grew by 8.0% in 1HFY20 due to strong sales growth and despite cost headwinds including higher team member costs as a result of new Enterprise Agreement of the company. New Zealand Food also had a strong half with sales growth of 4.8% and EBIT growth of 6.4%. VOC NPS achieved a new high in December as the company continued to improve the customer experience. Comparable sales growth in Q2FY20 remained strong with October 2019 benefitting from the successful Disney Words collectables program. EBIT growth was driven by sales and continued progress in total stock loss.
Outlook for FY20
In Australian Food, higher food inflation is likely to continue given the ongoing impact of the drought. At this stage, while the bushfires have impacted fruit and vegetable quality in some instances, they have not had a major impact on the availability of products on the company’s shelves
New Zealand Food will continue to focus on embedding the company’s Great Price architecture, the fresh experience and offering more conveniences for customers through new formats or new ways to shop to maintain sales momentum.
New Stores Rollout Plan (Source: Company’s Report)
Stock Performance
The stock of WOW last traded at $40.730 per share, on 26th February 2020, down by 2.676% from its previous closing price, with a market capitalisation of $52.78 billion. It’s 52-week low and high are $28.455 and $43.960, respectively, while the total outstanding shares of the stock stood at 1.26 billion. The stock of the company has given a return of 7.25% and 17.33% in the time period of 3 months and 6 months respectively.
