The month of February is the time of year when the majority of companies on the local stock exchange will reveal their financial results for the six-month period ending December 31 2016.
That means we're likely to see violent swings in share prices from some companies if they deliver surprisingly strong or weak operating financial results or forecasts.
Below I have three companies that I think might be about to disappoint investors, although I could be completely wrong, so it's best to make your own judgements as to what the future holds.
We've already seen the likes of software business Aconex Ltd (ASX: ACX), money transfer business OFX Group Ltd (ASX: OFX) and fintech business GBST Holdings Limited (ASX: GBT) blame recent downgrades on Brexit-related trade slowdowns and I wouldn't be surprised if a few more use this excuse.
Below I have three businesses that may disappoint over the short term or longer.
Flight Centre Travel Group Ltd (ASX: FLT) has heavy exposure to the strength of the UK corporate and consumer travel market through its network of online and bricks-and-mortar travel agencies in the UK. The group has come up with a series of profit downgrades recently and I expect it may provide another disappointing trading update soon.
Iress Ltd (ASX: IRE) has similarities to GBST in that it is a software provider to financial services business with heavy exposure to the U.K. and its large amount of financial services providers. The one thing that makes Iress especially vulnerable to a price correction is its lofty valuation. However, it remains a market-leading software provider and the stickiness of its products mean it is much less vulnerable than a business like GBST to spending slowdowns. Still as a shareholder I realise Iress has no room for disappointment when it reports half-year results later this month.
Telstra Corporation Ltd (ASX: TLS) is a business beloved by investors for its fully franked dividends and seemingly dominant competitive position in the mobile space. I expect the arrival of the national broadband network and competitive forces may put pressure on its earnings which could lead to the eventual flagging of dividend cuts given the already maxed out payout ratio. Any hint that Telstra is not performing to expectations for its dividend-loving investors could spell trouble for the share price.
