5 lessons I learned from earnings season

Some big losers are showing us what to look out for in the next 12 months.

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It's been a really interesting month on the Australian share market!

There have been some big winners and even bigger disappointments, with dramatic share price movements almost every day to keep us entertained.

Hitting or missing expectations is one thing, but investors learned a great deal about market conditions from the companies that reported.

Here are five interesting takeaways from reporting season which may shape your investing for the next 6-12 months:

Lesson 1: While the property market remains heated, purchasers may be acting in a more restrained manner and not pushing themselves to the edge of their borrowing capacity. Genworth Mortgage Insurance Australia (ASX: GMA) advised us that it experienced "reduced high loan-to-value ratio (LVR) lending as a proportion of total mortgage originations." This could indicate that some of the heat is coming out of the market.

Lesson 2: Governments are taking more interest in mergers. Sky Network Television Ltd (ASX: SKT) shares were punished as the regulator rejected their merger bid with Vodafone NZ.

Lesson 3: Large events won't necessarily bring in big dollars for television companies. Seven West Media Ltd (ASX: SWM) actually suffered as a result of covering the Olympics. Costs rose and other networks attracted more viewers than expected. It will be interesting to see how the next round of Big Bash League rights turns out for the winner.

Lesson 4: Company-specific issues can get in the way of rising resources prices. OceanaGold Corporation (ASX: OGC) shares were hammered at a time when its rivals were surging due to the suspension of its mine in the Philippines due to political issues.

Lesson 5: China might not be so scary for infant formula producers. Despite its share price falling following weaker-than-expected results, Blackmores Limited (ASX: BKL) showed investors that as part of a diversified product offering, weak baby formula sales in China don't have to weigh particularly heavily on earnings.

Where to from here?

I believe the last 6-12 months has shown investors that the need to focus on high quality, dividend-producing companies is as great as ever.

Most of us didn't predict the rebound of mining companies, however one would also expect that it cannot last too long. So focussing on the highest quality companies has to be a reasonable way to achieve above-market returns in the coming years.

Motley Fool contributor Andrew Mudie has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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