Australian reporting season opportunities
August is probably one of the most exciting periods of the year when it comes to Australian stocks. Why? Because it is when most companies publish their scorecard and set their agenda for the next financial year. For companies with a June balance date, reports start hitting the market in the first week of August. It lasts for just over a month. Companies with a December balance date will be reporting their interim results. These are usually Australian listed companies with the majority of their operations offshore in places like the USA, UK or Europe.
While most look at the earnings number, my interest tends to be more on the balance sheet, cashflow statement and outlook. I look at dividend payments as a guide to how comfortable boards and managements are with their businesses.
The earnings number means very little to me, expectations have been set and any discussion around earnings is really a discussion on history. I’m more concerned about the future. Potential gains will come in the future. The past is over, finished.
I’ll be looking for the following trends:
– Net gearing and balance sheet strength. I want to see who has done hard work in repositioning their business for the next phase of growth.
– Cash conversion. I look at the difference between reported EBIDA and cash EBITDA. As a general rule of thumb, I don’t like if the two vary by more than 5%.
– Outlook statements. I want to see what companies have to say, who is optimistic and who has enough courage to qualify their growth prospects.
We’ll be taking all of those notes and with a strong focus on smaller companies, we will be publishing weekly trading recommendations to Invast clients. Pinpoint accuracy of entry and exit points, how to trend and when to trade.
If you’re lacking ideas and don’t have the resources to work through the intense volume of results coming out of the market, our team is here to help.
If you’re not an Invast client, it might be a good time to get your trading account ready. You can self-navigate through our simplified account opening process here.
Remember, August is the holy grail of Australian stock trading opportunities.
Chief Market Analyst
Peter Esho is a member of Invast’s Investment Committee and Chief Market Analyst at Invast Financial Services in Australia. The Invast’s Investment Committee constructs professionally constructed global thematic portfolios of Direct Market Access (DMA) CFDs over highly liquid global shares and ETFs through its new PortfolioInvestor platform. Since 1960, the Invast Group has grown to become one of the largest and most successful global brokerage firms, offering state-of-the-art trading technology and unparalleled service catering to all levels of traders.
Invast Financial Services Pty Ltd (ABN 48 162 400 035) is regulated by the Australian Securities and Investments Commission and holds an AFS Licence 438283 which authorises it to carry on a financial services business in Australia.