The frantic August 2014 earnings season has come to an end. There were some big winners and big losers, but as analysts enter all the numbers into their records, upgrades and downgrades are made to their outlooks, and subsequent recommendations are issued.
A review of analysts’ recommendations by Bloomberg identified a surprising list of companies that have earned the praise of Australia’s top analysts due to standout results or turnaround potential.
Perhaps unsurprisingly, four of the companies identified by Bloomberg as having an improving standing amongst analysts reported results or outlook statements that surprised shareholders and analysts.
M2 Group Ltd (ASX: MTU) recorded a massive 50% jump in profit and forecast strong organic growth in 2015 following years of acquiring many of its local competitors. M2 made practically every post a winner in 2014 and the share price has made a decisive break to all-time highs as a result. A healthy 4.5% dividend also makes the company a winner for many investors.
Ozforex Group Ltd (ASX: OFX) disappointed investors in July when it pre-announced results that beat company profit forecasts but didn’t include as many active users as expected. The subsequent sell-off makes the company appear cheap for the growth on offer and analysts have become more positive on the group outperforming on lower expectations.
The Reject Shop Limited (ASX: TRS) also disappointed shareholders last financial year as the cost of new store openings slashed group profit. The share price has halved as a result and expectations have never been lower for the previously high-flying company. Analysts are positive on the group’s prospects in 2015 as the new stores will contribute to sales and a further 20 stores will open. Same-store sales will be a key figure to watch.
Legal firm Slater & Gordon Limited (ASX: SGH) reported another terrific set of earnings, which prompted local analysts to become even more positive on the group’s future. The share price has doubled over the last 12 months but could go much higher if the company continues to perform. Acquisitions have been a driver of profit growth and investors will be searching for margin expansion as integration continues.