Top broker tips 8 ASX shares to surprise this earnings season

Qantas Airways Limited (ASX:QAN) and Wesfarmers Ltd (ASX:WES) are two of eight shares tipped to surprise during earnings season…

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Earnings season kicked off this morning with the release of the Credit Corp Group Limited (ASX: CCP) full-year results. This is the first of countless results that will be flooding in over the next few weeks.

As always, some shares will surprise the market over the coming weeks and others will disappoint it. In order to have a successful month, you’ll want to have more of the former in your portfolio.

Which is why Goldman Sachs is helping investors by picking out the shares that it thinks will surprise the market with earnings beats, guidance surprises, or capital management plans. They are as follows:

Crown Resorts Ltd (ASX: CWN)

The broker has forecast Crown achieving net profit after tax of $383 million, 4% above the Bloomberg consensus. It expects this to be driven by an improving consumer backdrop in Victoria. In addition to this, it believes announcements could be made regarding Crown Sydney, capital management programs, and a Melbourne hotel joint venture development.

Inghams Group Ltd (ASX: ING)

Goldman believes that capital management initiatives from this poultry company could be a positive surprise. The broker feels that this is likely to be from a share buyback program which it estimates could be 5.5% to 11.5% earnings accretive.

Pact Group Holdings Ltd (ASX: PGH)

Its analysts feel that the market has been too pessimistic on this packaging company’s Rigids business. While the broker acknowledges that revenue growth in the Rigids business will become tough as acquisition opportunities run dry, it believes its recent Chinese acquisition could be the answer.

Qantas Airways Limited (ASX: QAN)

Earlier this year the airline advised that it expects to achieve profit before tax between $1,560 million and $1,600 million in FY 2018. Goldman suspects that Qantas will hit the high end of its range due partly to elevated international inbound tourism and improving operating metrics.

Seven Group Holdings Ltd (ASX: SVW)

Goldman’s estimate for Seven’s FY 2018 EBITDA is 10% above the market consensus. The broker believes that strong results from its WesTrac and Coates Hire businesses will be the primary driver of this outperformance.

Sims Metal Management Ltd (ASX: SGM)

The broker expects Sims Metal Management to report above consensus FY 2018 results and provide positive commentary for FY 2019. This is likely to be driven by a strong backdrop for scrap volumes and improved pricing.

Suncorp Group Ltd (ASX: SUN)

Its analysts think that the market’s expectations for FY 2019 are undemanding and the insurance company could provide better than expected guidance if its efficiency program has yielded results and it decides to offload its Australian life insurance business.

Wesfarmers Ltd (ASX: WES)

Although this conglomerate doesn’t tend to provide guidance to the market, the broker believes that positive commentary around the Bunnings business in FY 2019 will be important. After all, once the Coles business is demerged the hardware brand will account for an estimated 58% of earnings before interest and tax in FY 2019.

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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 and has recommended Crown Resorts Limited and Wesfarmers 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.

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