August is traditionally the busiest month of the year as the majority of ASX listed companies report their 6 or 12 month results to the end of June 2012. The deadline for reporting is set as the end of August, which is why you may notice many companies report their results in the last few weeks of the month.
Some companies, either with fairly simple operations or great accounting systems will report earlier in the month, and some even report as early as July – GUD Holdings Limited (ASX: GUD) and Navitas Limited (ASX: NVT) are examples.
Given the weak economic environment, analysts (and many investors) will be eagerly poring over company statements, attending company briefings and presentations in an effort to assess any changes in company fortunes. For many broker analysts, the most important piece of information is not what the company has just reported, but what the company’s outlook is and forecast for the following year. (After all, if the company forecasts to make a certain amount of profit or revenue in the coming year, that’s pretty easy to plug into their models, rather than having to trying and produce the forecasts themselves).
August will see a vast variety of companies reporting results including banks, telcos, utilities, property trusts (or A-REITs as they are now known), retailers, services & financial companies, miners, explorers and your standard industrial companies like Boral Limited (ASX: BLD) and Amcor Limited (ASX: AMC). Novice and expert investors alike, can struggle to work out whether the results are good or not.
To help you make sense of company results, we’ve prepared a series of articles on the major sectors. We’ll also be bringing you updates on many of the largest and most popular stocks, as they report.
For all companies, I’ll be looking for any one-off, or abnormal items, which are gains or losses on things like sale of assets, writedowns of goodwill and other intangibles, restructuring expenses. BHP Billiton’s (ASX: BHP) US$2.8 billion writedown on the value of its shale gas assets is a perfect example. Some companies, like Amcor, report one-offs so frequently, you have to wonder if they should actually be classified as one-offs, or included as part of normal business. In weak economic conditions such as we are currently experiencing, companies may use the opportunity to take more one-off expenses, especially if they report a loss. Investors don’t seem to take much notice how big the loss is, just that the company has reported a loss.
I’ll also be looking at profit growth and margins, return on equity and debt levels for all companies. Hopefully, I’ve whetted your appetite and the previews add something to your investing knowledge. With that in mind, watch the website for the imminent release of the first reviews. We’ll also be updating this article with links below to the whole series.
- Reporting preview – contracting and services companies
- Reporting preview – retailers
- Reporting preview – resources companies
- Reporting preview – telecommunications
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Motley Fool writer/analyst Mike King owns shares in BHP and GUD Holdings. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.