With earnings season just a few weeks away I thought I would look ahead to three results in particular which I’ll be watching out for.
Here’s what is expected of them at present:
Afterpay Touch Group Ltd (ASX: APT)
According to a note out of Goldman Sachs, this fintech company is expected to deliver earnings per share of 5 cents and revenue of $134.6 million in FY 2018. In respect to its guidance for the following year, Goldman is looking for something close to $230 million. But on this occasion there may be less emphasis on Afterpay Touch’s financial performance and more on its penetration of the U.S. retail market. Whilst it is still early days, I suspect the market will be looking at U.S user numbers and comparing them to its Australian launch. Based on its current share price, I feel a fair bit of American success has been built into its shares already.
CSL Limited (ASX: CSL)
Over the last 12 months this global biotech company’s shares have been on a tear and climbed an astonishing 54%. The market has high expectations for FY 2018 after a particularly strong first-half to the year. Another recent note out of Goldman Sachs revealed that it has initiated coverage on the company with a buy rating and $231 price target. It expects CSL to grow EBITDA by an average of 14% per annum from FY 2017 through to FY 2021. While I remain confident in the company achieving what is expected of it, any hint that its earnings are not going to grow at this rate could weigh on its shares.
Ramsay Health Care Limited (ASX: RHC)
I’ll also be watching out for Ramsay Health Care’s result in August to see how trading has begun in FY 2019. The private hospital operator had a tough finish to the last financial year, resulting in a downgrade to its core earnings per share guidance. Instead of guidance in the range of 8% to 10% growth year-on-year, core earnings per share is now expected to come in 7% higher than last year. Management has warned that the current climate around private health insurance and affordability was likely to mean FY 2019 would be equally tough. I suspect this could mean a further slowdown in growth this year, unless earnings accretive acquisitions are made early on.
This ASX small cap is up 285% with no sign of stopping... I expect a strong result from it again.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 Scott Phillips.