Reporting Season Feb 2021: The home stretch
About the author:
- 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:
- Given we’re nearly back at the Feb 2020 market peak, valuations have mostly priced in the upgrades;
- Demand has been brought forward and will likely taper off quickly as the generous government handouts end; and
- A broad reflationary rotation has prompted profit-taking in expensive COVID-19 winners.
Results still to come
View our expectations and commentary for companies still to report this week:
Reporting Season Calendar
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