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Highlights
- Positive earnings numbers that are above the usual market sentiments lead to a surge in stock price. In contrast, revenue and profit decline drive the negative sentiments leading to sell-off.
- Flutter expects lower full-year revenue compared to previous guidance.
Earnings seasons witness higher market participation and liquidity from the retail and institutional investors. It is the period in which many publicly traded companies not only announce their results but also interact with shareholders as well.
Market participants analyse the company’s results and review their portfolio positions, leading to intense stock activity as the market reacts to new data. Traders also try to anticipate the earnings number of the companies. The earnings number that is positive and above the usual market sentiments lead to a surge in stock price. In contrast, a drop in revenue and profits drive the negative sentiments leading to sell-off. Traders take a general view around the company result to take long and short positions in the market.
Let us look at 2 FTSE listed stocks that are in focus after announcing results:
Flutter Entertainment Plc (LON: FLTR)
The company operates in the casino and gambling segment, offering sports betting and gaming service. It has operations in the UK and other countries.
FTSE 100 company announced its trading update for the three months to 30 September 2021. The company reported a 9% growth in total revenue at £ 1,439 million. However, despite positive revenue growth, the stock price declined by around 8% after the company revealed that it expects lower full-year revenue compared to previous guidance.
The company has reduced its earnings forecast to £1.24bn-£1.28bn from £1.27bn - £1.37bn primarily due to unfavourable sports results in October 2021, which has led to a loss of around £60 million, while the temporary exit from the Netherland market due to regulation changes could lead to loss of £10 million in the fourth quarter.
Despite lower guidance for the upcoming quarter, the company was able to grow its average monthly players. Also, the company plans to spin off its US business, FanDuel, which has been delayed following the departure of FanDuel CEO. But the company has hired the new CEO, Amy Howe, last month, which could bring the US business listing back on track.
Flutter Entertainment Plc closed at GBX 12,955.00, down by 7.70% on 2 November 2021 with a market cap of £24,616 million.
Standard Chartered Plc (LON: STAN)
The UK-based company operates in the financial sector, offering different financial services and products to retail and institutional clients.
The financial lender reported an operating income of USD 3,764 million, while its profit before tax was USD 996 million for the three months ended 30 September 2021. The stronger earnings above the market estimate were attributed to lower credit impairment charges by the bank
After the result announcement, the stock price was down by around 8% as the investor decided to book profit. According to market experts, investors anticipate slower growth recovery in Standard Chartered business compared to more bullish estimates by peer banks. Also, the bank said that it has USD 4.2 billion exposure to China’s real estate market, which has been collapsing due to high debt and loan payment defaults led by Evergrande Group, which may have caused fear and nervousness amongst investors.
Standard Chartered Plc closed at GBX 466.10, down by 7.85% on 2 November 2021 with a market cap of £15,574 million.
