Rudi’s View: Week 3 – Not As Good, But Not Bad

Always an independent thinker, Rudi has not shied away from making big out-of-consensus predictions that proved accurate later on. When Rio Tinto shares surged above $120 he wrote investors should sell. In mid-2008 he warned investors not to hold on to equities in oil producers. In August 2008 he predicted the largest sell-off in commodities stocks was about to follow. In 2009 he suggested Australian banks were an excellent buy. Between 2011 and 2015 Rudi consistently maintained investors were better off avoiding exposure to commodities and to commodities stocks. Post GFC, he dedicated his research to finding All-Weather Performers. See also "All-Weather Performers" on this website, as well as the Special Reports section.

Rudi's View | Feb 28 2024

Week 3: Not As Good, But Not Bad

By Rudi Filapek-Vandyck, Editor

As the local corporate results season went through its third week, it became obvious the heavy skew towards positive surprises could not be maintained.

As it turned out, the busiest week of the season (involving some 40% of the ASX200 market cap) saw the number of misses and disappointments rise quite quickly, without destroying the positive sentiment that has prevaled throughout this season.

To illustrate what is happening in February, we might as well rely on the FNArena Corporate Results Monitor.

-Week One had total 'beats' on 52.4% with only one disappointment from REA Group ((REA)) on a strong performance with increased investments to be made.

-By the end of Week Two the Monitor had 'beats' on 41% -still strong by historical standards- with disappointments rising to 22%, still low by historical comparisons.

-By Friday, week three ended with 'beats' on 38% and 'misses' on 28%.

To put some perspective around these numbers: if they were maintained throughout the closing week, this would still be the third best February season since 2014, as far as percentage of 'beats' is concerned.

But then the percentage of misses is also the fourth highest for the period.
Conclusion: it's a polarised market out there, and results season is showing just that.

By late on Monday, as I am writing this week's update, the percentages have changed to 36.3% 'beats' and 26.7% 'misses'.

Still, those with a positive outlook can seek solace from the fact nearly three out of four corporate releases either meets or beats forecasts. Plus the number of spectacularly negative market updates a la Nuix ((NXL)) or Appen ((APX)) or EML Payments ((EML)) in the past has remained quite limited thus far.

That said, most investors would still like to avoid share price punishments for the likes of Corporate Travel Management ((CTD)), Lendlease ((LLC)), Strike Energy ((STX)), The Star Entertainment Group ((SGR)), Nanosonics ((NAN)), and MA Financial Group ((MAF)) if they can.

Overly popular Pro Medicus ((PME)) can claim the title of fastest recovery this season.

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