We're coming into August – reporting season – where most companies in the S&P/ASX200 (INDEXASX: ^AXJO) (ASX: XJO) release their annual reports.
Reports are one of the best ways to get updates on a company's strategy, and here are three companies whose reports I think could be worth looking at closely:
Sirtex Medical Limited (ASX: SRX)
Sirtex shares have been pummelled this year after the firing of the former CEO and growth that was well below expectations. With a new CEO in place and a class action ongoing against the company, investors will want to look for three things:
- To see if dose sales growth has picked up again and look for evidence this growth might be sustainable
- Read management comments to understand the new CEO's strategy
Retail Food Group Limited (ASX: RFG)
Retail Food Group is one of the most heavily short-sold companies in Australia right now, for reasons which I outline here. Investors will want to check the company's performance on metrics that are encouraging the short sellers:
- Check sales growth at franchises, as well as the number of franchises currently for sale/ the amount of franchise turnover in the year
- Check if international expansion is proceeding as planned (this being one of the primary growth opportunities)
- Watch for management comments around franchisee profitability, and also check if synergies from recent acquisitions are being realised (this is a primary source of profit growth)
Vocus Group Ltd (ASX: VOC)
Lastly, Vocus' share price is unlikely to move much as it is effectively pinned in place by multiple indicative takeover bids at $3.50 a share. Shareholders will want to check a few things:
- That the company meets its revenue and profit guidance, after two downgrades this year
- That the company is on track to unlock expected synergies from recent acquisitions
- Make sure Vocus' ability to repay its significant debt doesn't decrease
These things will prove key to either ensuring that a bid goes ahead, or, will show that the company is worth more than $3.50 and is thus undervalued today.
