Earnings optimism is back!

LiveWire02-05

(This story was written and published on Monday, 3 February 2025 so share prices and moves mentioned have likely changed since). The February results season will soon be in full swing. As I ...

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As I ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/earnings-optimism-is-back\">Source Link</a>\n\n</div>\n","source":"livewire_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Earnings optimism is back!</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEarnings optimism is back!\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-02-05 14:18 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.livewiremarkets.com/wires/earnings-optimism-is-back><strong>LiveWire</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>(This story was written and published on Monday, 3 February 2025 so share prices and moves mentioned have likely changed since).\nThe February results season will soon be in full swing. As I ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/earnings-optimism-is-back\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK7124","symbol_name":"保健护理服务","start_time":0,"source_url":"https://www.livewiremarkets.com/wires/earnings-optimism-is-back","article_id":"2509447448","we_media_id":null,"thumbnails":[],"rights":{"source":"livewire_stock","url":"https://www.livewiremarkets.com/wires/earnings-optimism-is-back","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2509447448","pubTimestamp":1738736339,"columns":[],"sourceInfo":{"source_id":"livewire_stock","name":"Livewire Markets"},"weMediaInfo":null,"summary":"The February results season will soon be in full swing. As I traditionally like to point out: every season has its specific character. This time will be no different.But results seasons are rarely guided by earnings reports only. Events over the weekend past have reminded investors US policy decisions will be part of the mix that impacts on share prices this year.Irrespective, most market updates released locally last week saw share prices weaken in the aftermath, including for the two companies that issued financial results, Credit Corp  and ResMed .Last year’s August season proved a rather underwhelming experience, generating 37% in misses --well above average-- and only 27% of beats, marking the worst milestone for corporate results in Australia post 2013, when FNArena started gathering such stats.Shares in Zip Co, for example, are now down more than -29% since disappointing the market, though some of that weakness is US import tariffs related.With no disasters or major downgrades e","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7124":"保健护理服务","BK7016":"应用软件","XJO.AU":"标普/澳交所 200指数","XKO.AU":"标普/澳交所 300指数","PMV.AU":"PREMIER INVESTMENTS LIMITED","BK7021":"服装零售","XAO.AU":"标普/澳交所 普通股指数","KGN.AU":"KOGAN.COM LTD","BK4548":"巴美列捷福持仓","ORG":"The Organics ETF","BK7121":"多样化房地产活动","LLC.AU":"LENDLEASE GROUP","MYR.AU":"MYER HOLDINGS LTD","ORG.AU":"ORIGIN ENERGY LTD","AZJ.AU":"AURIZON HOLDINGS LTD","BK7029":"百货商店","ASG.AU":"AUTOSPORTS GROUP LTD","ZIP.AU":"Zip Co Ltd","RMD.AU":"Resmed DRC","FPH":"五点控股","BK7143":"汽车零售","BK4567":"ESG概念","BK7501":"新冠治疗股","BK7140":"铁路","BK4539":"次新股","BK4077":"互动媒体与服务","BK7503":"科技股","IPD.AU":"IMPEDIMED LTD","ZIP":"ZipRecruiter Inc.","MDR.AU":"MEDADVISOR LTD","HLS.AU":"HEALIUS LTD","RMD":"瑞思迈","CTT.AU":"Cettire","BK4212":"包装食品与肉类","PME":"平潭海洋实业有限公司","BK7093":"消费信贷","BK7153":"综合零售","CTT":"CatchMark Timber Trust Inc. Class A","PME.AU":"PRO MEDICUS LTD","REA.AU":"REA GROUP LTD","AX1.AU":"ACCENT GROUP LTD","BK7507":"资源股","LU2177674079.SGD":"Fidelity Asia Pacific Opportunities A-ACC-SGD (hedged)","BK4193":"多样化房地产活动","ASG":"Liberty All-Star Growth Fund Inc","BK4084":"特种房地产投资信托","BK7002":"互动媒体与服务","FPH.AU":"FISHER & PAYKEL HEALTHCARE C","CCP.AU":"CREDIT CORP GROUP LTD","WTC.AU":"WISETECH GLOBAL LTD"},"translate_title":"盈利乐观情绪又回来了！","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ORG":1,"CCP.AU":1,"ASG":1,"CTT.AU":1,"FPH":1,"FPH.AU":1,"HLS.AU":1,"IPD.AU":1,"KGN.AU":1,"LLC.AU":1,"MDR.AU":1,"MYR.AU":1,"CTT":1,"ORG.AU":1,"PME":1,"PME.AU":1,"PMV.AU":1,"REA.AU":1,"RMD":1,"RMD.AU":1,"WTC.AU":1,"ZIP":1,"ZIP.AU":1,"ASG.AU":1,"AX1.AU":1,"AZJ.AU":1,"XKO.AU":0.9,"XJO.AU":0.9,"XAO.AU":0.9},"content_text":"(This story was written and published on Monday, 3 February 2025 so share prices and moves mentioned have likely changed since).\nThe February results season will soon be in full swing. As I traditionally like to point out: every season has its specific character. This time will be no different.\nBut results seasons are rarely guided by earnings reports only. Events over the weekend past have reminded investors US policy decisions will be part of the mix that impacts on share prices this year.\nIrrespective, most market updates released locally last week saw share prices weaken in the aftermath, including for the two companies that issued financial results, Credit Corp (CCP) and ResMed (RMD).\nIf we include market updates on profit guidance and quarterly performances the list of casualties grows quickly, also including Accent Group (AX1), Autosports Group (ASG), ImpediMed (IPD), Kogan (KGN), MedAdvisor (MDR), Origin Energy (ORG), Premier Investments (PMV), Zip Co (ZIP), and numerous others.\nLast year’s August season proved a rather underwhelming experience, generating 37% in misses --well above average-- and only 27% of beats, marking the worst milestone for corporate results in Australia post 2013, when FNArena started gathering such stats.\nShould investors worry about a lack of progress made since?\nProbably not. The RBA is readying Australia for rate cuts this year which no doubt will be reflected in more optimism when companies provide forward-looking guidance.\nThe same optimism is also creeping into investors’ mindset which might lead to more companies receiving the benefit of the doubt this month, as long as there’s a genuine prospect of better operational momentum later in the year.\nThe offset is that valuations generally are a lot higher too and many a market watcher seems worried about what might happen to share prices if expectations are not met.\nShares in Zip Co, for example, are now down more than -29% since disappointing the market, though some of that weakness is US import tariffs related.\nBefore we start digging deeper into likely signals and potential impacts, let’s take a look first at the broader framework for the Australian share market in the opening weeks of 2025.\nEarnings Growth (And The Lack Thereof)\nThe first observation is that underwhelming corporate earnings have not prevented the Australian share market from posting 11.17% in total return over 2024, which compares quite favourably with a much more modest general sentiment throughout the year.\nA lot can be explained by the positive performance from the banks, despite little to no growth for the sector generally.\nLocal superfunds proved the key buyers during the first three quarters last year and international investors joined in during the closing three months.\nWith no disasters or major downgrades expected, and with banks and financials expected to outperform this year internationally, it seems likely shares in Australian banks will remain supported throughout 2025, despite the absence of strong earnings growth.\nOutside of the banks, only about half of ASX200 companies experienced a gain in share price last year and an even smaller group outperformed the index; those performances were much closer aligned with underlying growth in earnings.\nThe same observation applies to the much larger group for whom sustainable share price gains proved a bridge too far; look no further than the absence of earnings growth if a proper explanation is required.\nAverage earnings per share growth in Australia has been negative in FY23 and FY24. FY25 (June 30) looks set for a continuation of that trend.\nThose numbers are always heavily impacted by what happens in energy and commodity markets, but don’t let that blind you to the fact corporate Australia does have a growth problem.\nThe gap between, say, Aurizon Holdings (AZJ), LendLease (LLC) and Healius (HLS) on one side and Pro Medicus (PME), WiseTech Global (WTC) and REA Group (REA) on the other side has grown to the size of the Indian Ocean in recent years.\nWe don’t need a Master of Finance degree to explain the difference in share price performances.\nClose That Gap!\nMany in today’s market are counting on a narrowing of the gap between Winners and Laggards, which –all else remaining equal– should allow those Laggards to put in a better share price performance.\nThe current quarterly reporting season in the US is providing plenty of signals this might indeed be happening in North America.\nAnalysts at RBC Capital reported the following this week:\nThe shift we’ve seen in leadership this year, with Value beating Growth and Small Cap stabilizing relative to Large Cap also seems justified from an EPS perspective, even without last week’s DeepSeek episode.\nOur favorite gauge of EPS sentiment –the rate of sell-side revisions to the upside– has shifted in favor of Small Cap over Large Cap (this means Small Cap has been seeing more upward revisions to EPS forecasts for this year and next).\nThis stat is technically still stronger for Growth and the top 10 market cap stocks in the S&P500 compared to Value and the rest of the S&P500, but the gaps have started to narrow suggesting Mega Cap Growth’s dominance on near-term EPS dynamics has softened.\nIn Australia, where the RBA has yet to deliver its first rate cut and with uncertainties looming from state and federal elections, we are unlikely to witness those same dynamics play out this month already, but we might spot some early green shoots.\nSuch optimism has underpinned a positive share market performance in January (up 4.57%) with various forecasters suggesting earnings in Australia are near a bottom or they might already be on the way up.\nAssuming this early optimism proves justified, the big difference with August last year when most misses were caused by underwhelming forward guidance, is this time boards and management teams might prove more optimistic.\nEarnings Forecasts And Broker Ratings\nDespite many downgrades happening on the back of corporate updates in January, it appears consensus forecasts are trending upwards, albeit cautiously, which is a signal that general optimism is rising.\nAs we are still in the early phase of earnings growth recovery, and with momentum inside the domestic economy uneven, there will still be plenty of room for nasty disappointments.\nConsider, for example, Autosports Group issued a profit warning in November last year and did it again in January.\nAnother worry is a share market trading near its all-time high leaves little room for disappointment for the Winners in today’s market.\nEven if we adjust for the local PE ratio to have risen to 16x over the past ten years, the current market multiple remains double digit above that average (closer to 19x before Monday’s sell-off).\nMy humble suggestion is having some cash on the sideline might prove very apposite throughout February as the market’s short-term knee-jerk response might create opportunities for those with a longer-term horizon.\nA recent preview by stockbroker Morgans suggests average EPS growth for calendar year 2025 is poised to rise to 5% from -2% in 2024.\nThe bulk of this improvement might not show up until the second half, but markets are forward-looking (in the absence of short-term disruptions).\nAll of the above is reflected in stockbrokers’ Buy, Hold and Sell ratings for ASX-listed stocks.\nFor the eight stockbrokerages monitored daily, the percentage of Buy and equivalent ratings has now risen to above 60% which is a rather rare occurrence.\nThe percentage of Buy ratings has been exceptionally high post covid, which reflects the uneven and narrow-based recovery for the Australian share market since.\nIt’s all well and good to proclaim shares in small caps and cyclicals are undervalued, without a notable recovery in earnings those share prices can remain “cheap” for a very long time.\nIn line with that extremely high percentage of Buys, the share of Hold/Neutral ratings has fallen below 33%, which hardly leaves anything left for Sell ratings (7.50%).\nEarly Signals\nAs suggested at the start of today’s Weekly Insights, let’s investigate whether there are lessons to be drawn from January’s market updates.\nCredit Corp’s result missed consensus forecasts and thus the share price received instant punishment while forecasts were adjusted downwards.\nAt face value, the company is positioned for strong growth this year, but this follows two years of declining profits.\nThe finer details show FY25 might still not match the result achieved in FY22. Competition for buying bad debt ledgers in the US remains key.\nZip Co’s market update also disappointed because of the US business, though in this case analysts believe the share price shellacking is overdone. Citi has upgraded to Buy.\nMore troubles in the US, however, has also triggered a warning from Citi analysts about the risks for online fashion platform operator Cettire (CTT) whose revenues are heavily skewed towards US consumers.\nVirtual pharmacist company MedAdvisors’ (MDR) disappointment also concerns slower US market momentum.\nImport tariffs on Mexican goods has prompted Fisher & Paykel Healthcare (FPH) to specify 60% of US sales are sourced from the neighbouring country.\nThis is likely to see analysts reduce forecasts in the days coming.\nDo we have a theme here?\nResMed’s Q2 performance was better-than-expected though some might fret about a gross margin that failed to lift.\nResMed’s share price rallied strongly into the release, then failed to extend that rally as the degree of positive surprise simply wasn’t large enough to warrant even more excitement.\nThe average target price from the brokers monitored daily by FNArena has risen to $43.05 from $41.08 and that’s the clearest indication that analysts, overall, liked the result and have been increasing their projections in response.\nThe ResMed experience also shows a great result does not by default always translate into a positive share price response.\nLonger-term, that response immediately after the result counts for nothing. It’s good to remember that too.\nPlenty of insights from Consumer-related companies, including Myer (MYR), Kogan, Accent Group, Premier Investments, etc.\nAutosports Group’s tough conditions can equally be traced back to household budgets under duress in Australia.\nThe discussion among analysts is still the same: are Australian consumers ready to increase their spending on the back of more election promises and RBA rate cuts?\nNeedless to say, there’s skepsis galore.\nToday’s debate also features Christmas purchasing and who was left out in the cold? All shall be revealed in the weeks coming.\nFNArena offers truly independent, impartial share market analysis and commentary, on top of proprietary tools and data for self-researching and self-managing investors. The service can be trialed at (VIEW LINK)\n\n\n\nNever miss an update\n\n    Enjoy this wire? Hit the ‘like’ button to let us know. \n    Stay up to date with my current content by \n    following me below and you’ll be notified every time I post a wire","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.30.2","shortVersion":"4.30.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2509447448"}