Roughly 55% of the ASX300 have now reported results, with only a handful of the ASX50 yet to report. Woolworths, Stockland and Fortescue are notable large-caps reporting this week.

August has been a story of Cyclical and Consumer facing stocks in particular in terms of

  1. surprising overly fearful expectations, and/or;
  2. being well supported by the market even if they didn’t.

Whether this can continue when fiscal support scales down will be a key question as we exit August.

Ultimately FY20 results disrupted by lockdowns and COVID related one-off’s are less meaningful than usual, particularly given the broad lack of FY21 guidance seen so far. Ongoing company trading updates and the AGM season are going to be far more important than usual, providing us with more catalyst trading opportunities which have worked well for us so far.


I provide an overview of the results and current observations:

Results scorecard

We've seen the highest rate of smaller cap "Beats" for several years. More than half are Consumer facing (including Education and Gaming) with Retailers comprising a whopping one-third. General speaking, Cyclicals have surprised, while Defensives have underwhelmed.

Expectations vs ASX200

Retailers are the one bright spot regarding FY21 upgrades. Retailers to report have enjoyed +10% upgrades to FY21 earnings per share (EPS) expectations with ~8% share price gains on average.

Elsewhere we've seen the usual erosion to FY21 expectations with the largest negative contributors including Telstra, CBA, AGL and various US$ earners.

Market optimism

Result day reactions highlight market optimism. The strongest result day reactions are in line with recent history but we are yet to see the market punish disappointment anything like it usually does.

We know equity markets like to pre-empt the recovery phase of the economic cycle which is why AGM season, and not less useful FY20 actuals, will be so important to validate this positioning (or not), especially relative to stretched valuations.

Checking in on trading behaviour

In our Reporting Season Preview, we spoke about tactics for trading around discrete catalysts given the mood of the market.

Of the +60 Catalysts flagged through July and August, the "Flagged Beats" have outperformed the "Flagged Misses" by ~12% since the published reports.

Notable winners include Collins Foods, AP Eagers, ALS Limited, Data 3, Adairs, Virtus & Monash, Isentia, Superloop and Dominos.

What's interesting is that much of that performance has occurred in the lead-up to the catalyst, rather than on the announcement.

Given the lack of FY21 guidance so far, trading updates and the upcoming AGM season look like providing a host of further opportunities to trade tactically around the abnormal mood, valuations and momentum in this market.

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Roughly 55% of the ASX300 have now reported results, with only a handful of the ASX50 yet to report.
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