With earnings season about to kick off, analysts at Goldman Sachs have been busy running the rule over a large number of companies to see which are likely to surprise to the upside and which are likely to surprise to the downside.
According to the note, the companies that Goldman Sachs expects to surprise positively in August are as follows:
BlueScope Steel Limited (ASX: BSL)
Goldman notes that a contraction in steel spreads has been a catalyst for the market to downgrade its FY 2020 forecasts for the steel producer. However, the broker believes the market is too negative and BlueScope's guidance could surprise to the upside.
Coles Group Ltd (ASX: COL)
Its analysts expect this supermarket giant to deliver comparable store sales growth of +2% and +2.7% respectively for the Food and Liquor divisions during the second half. In light of this, it expects Coles to achieve EBIT growth ahead of the consensus estimate for FY 2019 and next year.
HUB24 Ltd (ASX: HUB)
According to the note, Goldman Sachs believes that the market may be expecting this investment platform provider to fall short of expectations again this year. However, it suspects that HUB24 could surprise in August following its strong funds under administration update last week.
JB Hi-Fi Limited (ASX: JBH)
Although the broker expects JB Hi-Fi to deliver a full year result largely in line with consensus estimates, it notes that estimates for FY 2020 onwards vary greatly and appear to factor in future declines in earnings. A positive result could ease concerns and provide further upside.
News Corp (ASX: NWS)
Goldman expects News Corp's FY 2019 result to be in-line with expectations, but believes an update on its strategic review could spark interest from investors.
Qantas Airways Limited (ASX: QAN)
Once again Goldman expects a result broadly in-line with expectations. However, it sees upside risk to consensus estimates for FY 2020. "While domestic passenger volumes remained constrained, we believe (i) the company's RASK growth will improve yields in the short-term while (ii) capacity-cutting by its main competitor, Virgin Australia, will provide support to load factors assuming yoy passenger volume growth for CY2020."
Seven Group Holdings Ltd (ASX: SVW)
Another company that the broker thinks could surprise is this conglomerate. Goldman said: "While there could be some timing related issues in the 2H around the federal election, we expect results and guidance to reflect management's positive view on long term cyclical drivers (mining capex and infra spend)."
