We're over halfway through reporting season and there have already been a number of interesting results.
There have been a number of references to problems that are being caused by the coronavirus in China. Cochlear Limited (ASX: COH), Crown Resorts Ltd (ASX: CWN), WiseTech Global Ltd (ASX: WTC) and Corporate Travel Management Ltd (ASX: CTD) are just some of the shares facing lower-than-expected FY20 earnings because of Chinese issues.
Businesses that manage to turn around performance and excite the market again are the ones that have caught my interest the most this reporting season.
Here are my three favourite results so far:
Challenger Ltd (ASX: CGF)
The Challenger share price fell 54% from December 2017 to $6.50 in June 2019. And since then it has risen 59% back to $10.35. What a turnaround! Though it's not back to its former heights again.
The HY20 result wasn't exactly a thrilling set of numbers. Group assets under management (AUM) rose 10% to $86 billion, normalised net profit before tax rose 3% to $279 million and normalised net profit after tax fell 4% to $191 million. But the statutory net profit jumped to $214 million to $220 million.
Challenger's diversified product offering is helping it grow in some areas whilst other areas aren't doing as well.
It's a good showing of how a business can turn sentiment around.
Cleanaway Waste Management Ltd (ASX: CWY)
The Cleanaway share price fell 29% over three months to $1.78 at the end of October 2019. Since then the share price has gone up 32.6%.
Again, the result didn't include incredible growth numbers, but it was good enough for investors to change their mind in the company. The future of more re-using and recycling in Australia is good news for Cleanaway.
Underlying earnings per share (EPS) growth was 15.2% in the half year result with dividend growth of 21.2%. Management believe that earnings in the second half of FY20 is expected to be higher than the first half of FY20 and the second half of FY19.
Domino's Pizza Enterprises Ltd. (ASX: DMP)
Domino's has been on quite a rollercoaster. Between August 2016 and July 2019 the Domino's share price fell 51% and since then it has gone up 73.3%.
The company isn't reporting the same sort of growth it was several years ago, but the half year result was improved compared to the last year or two.
Network sales were up 10.6% to $1.58 billion, online sales were up 18.8% to $1.11 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) grew 10% to $151 million and free cash flow increased 59.3% to $58.2 million. Same store sales growth across its different operating regions was pleasing.
Foolish takeaway
Turnarounds seldom turnaround, but these three shares have gained back the confidence of the market. I'm not sure if they will beat the market over the next year, but they are certainly ones to watch for the rest of 2020.
