Reporting Season Feb 2021: The home stretch

About the author:

Andrew Tang
Author name:
By Andrew Tang
Job title:
Analyst - Equity Strategy
Date posted:
22 February 2021, 12:00 PM
Sectors Covered:
Equity Strategy and Quant

As expected result quality has deteriorated approaching the final week of reporting season. Of the 111 companies that we monitor, 45% have beat expectations down from 56% last week.

However this is still well above the c20% beat rate we’ve seen over the past five years. A remarkable turnaround considering the circumstances of the past 12 months.

Looking at the companies that have reported, FY21 earnings have been revised up a solid 10.6%. This figure is more impressive as it comes on the back of 10.2% upgrades from the previous reporting season (August 2020).

However, share price reactions generally have not followed the lead from earnings, which suggests to us that:

  1. Given we’re nearly back at the Feb 2020 market peak, valuations have mostly priced in the upgrades;
  2. Demand has been brought forward and will likely taper off quickly as the generous government handouts end; and
  3. A broad reflationary rotation has prompted profit-taking in expensive COVID-19 winners.

Watch

Results still to come

View our expectations and commentary for companies still to report this week: 

Reporting Season Calendar   

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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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