My 3 losers from reporting season

Reporting season is officially over and my colleagues’ fingers can collectively have a sigh of relief from all the typing.

But, as investors, it’s now time to look over some results and decide whether shares are worth buying after their reports.

However, for some businesses it has not been a good reporting season for one reason or another.

Here are three lowlights for me from reporting season:

Healthscope Ltd (ASX: HSO)

Healthscope is Australia’s second largest private hospital operator. It supposedly has attractive long-term tailwinds because of Australia’s ageing population and this should mean more patients going through the hospital doors as time goes on.

That might be the case, but its report wasn’t encouraging. Australian hospital revenue was up but profit was down. I don’t mind that Healthscope is investing for the future – that’s very important.

My key reason for why Healthscope was a loser this time was because Ramsay Health Care Limited (ASX: RHC) reported today that its Australian earnings before interest and tax (EBIT) increased by 9.1%. Ramsay is growing profit whilst also investing for the future. I hope Healthscope can find its way to profit growth soon.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Domino’s is Australia’s largest pizza business. Its profit growth rate was dramatically reduced in this latest report, which justifies the market reducing its share price to around $40 as it still trades on a hefty price/earnings ratio.

This alone is a cause for concern for Domino’s shareholders, but it also isn’t a good look for the CEO to be embroiled in margin call and share buyback controversies. Don Meij has been at the helm for Domino’s meteoric growth for many years, it would not be good for the company if this distracts him from running the business or an even worse outcome.

Retail Food Group Limited (ASX: RFG)

Analysts, journalists, franchisees and customers all seem to be getting a little sick of Retail Food Group. The company hasn’t actually reported yet, indeed it entered into a trading halt because the auditor has not yet delivered its report on the company’s financial report.

Retail Food Group said that it expects this half year’s profit to be materially less than the result last year. The company may not receive the auditor’s report until 2 March 2018, meaning it could be in a trading halt for the next couple of days.

Foolish takeaway

Shareholders of all three companies would be entitled to be unhappy at the current state of affairs. I hope management of all three can resolve the issues soon and get back to solid profit growth.

Instead of the above stocks, I reckon these top shares will keep pleasing shareholders.

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Motley Fool contributor Tristan Harrison owns shares of HEALTHSCPE DEF SET and Ramsay Health Care Limited. The Motley Fool Australia owns shares of and has recommended Retail Food Group Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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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