It’s been a mixed reporting season so far, with some ASX shares spurred higher off the back of encouraging results, while others have been sold off. Investors have been jubilant when results exceed guidance and forecasts are upgraded.
So, here we take a look at six S&P/ASX 200 (INDEXASX: XJO) shares that have upgraded guidance this reporting season, and ask why.
CSL Limited (ASX: CSL)
After a strong first half, CSL upgraded its full-year forecast, with net profit after tax (NPAT) now expected to be in the range of US$2,110 million to US$2,170 million. Previously, CSL had guided NPAT of US$2,050 million to US$2,110 million.
For 1H20, CSL delivered strong profit growth with NPAT up 11% to US$1,248 million. Earnings per share increased 11% to US$2.75 and an interim dividend of A$1.42 per share was declared, up 18%.
CSL’s results reflected strong growth in immunoglobulin products, a robust performance from the Seqirus influenza vaccines business, and continued evolution of the haemophilia therapies portfolio. Chief Executive Officer and Managing Director Paul Perreault said, “CSL is well positioned for sustainable growth. Exceptional demand continues for our differentiated therapies.”
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
Fisher & Paykel is another ASX healthcare share that has updated revenue and earnings guidance this month. Previous guidance was for operating revenue of approximately NZ$1.19 billion and NPAT of approximately NZ$255 million to NZ$265 million. Updated guidance provided last week is for revenue of NZ$1.2 billion with NPAT in the range of NZ$260 million to NZ$270 million.
Fisher & Paykel advised that it has seen better than expected sales in its Homecare product group along with continued strong demand in its Hospital product group. This includes an increase in demand from China relating to the coronavirus outbreak.
The company has received queries regarding possible impacts to its supply chain resulting from coronavirus. Fisher & Paykel Healthcare does not have a manufacturing facility in China, however, some of its suppliers of raw materials are based in China. At this stage, Fisher & Paykel does not anticipate any significant impact on supply to existing customers. The company will continue to assess this on an ongoing basis.
JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi recently upgraded its full-year guidance after a strong first half. Previously, full-year sales were expected to be around $7.25 billion, consisting of $4.84 billion from JB Hi-Fi Australia, $0.24 billion from JB Hi-Fi New Zealand, and $2.18 billion from The Good Guys. Updated guidance is for full-year sales of $7.33 billion, consisting of $4.93 billion from JB Hi-Fi Australia, $0.24 billion from JB Hi-Fi New Zealand, and $2.18 billion from The Good Guys.
Total sales for JB Hi-Fi Australia grew by 5.1% to $2.72 billion during the first half of FY20 with comparable sales up 4.4%. Key growth categories were Communications, Audio, Visual, and Accessories. Online sales grew 18.3% to $170.8 million or 6.3% of total sales. JB Hi-Fi Australia reported total sales growth of 6.5% in January, up from 3% in January 2019, and comparable sales growth of 6%, up from 1.5%.
JB Hi-Fi reports that it is pleased with the Q2 and January sales momentum in Australia. However, it continues to see growth in low margin categories and bias in customer purchasing towards key promotional periods.
Coles Group Ltd (ASX: COL)
Coles released a trading update ahead of its 2020 half-year results announcement updating guidance. The success of the Christmas campaign exceeded expectations. Supermarkets delivered comparable sales growth of 3.6% in the second quarter and 2.0% for the half. Comparable sales growth in Liquor and Express were 2.1% and 5.1% respectively for the second quarter, and 1.5% and 2.9% respectively for the first half.
Forecast first-half earnings before interest and tax (EBIT) were anticipated to be between $710 million and $730 million. Supermarket EBIT growth in the first half of FY20 benefited from incremental costs incurred in the first half of FY19 relating to the removal of plastic bags and increased Flybuys promotions which were not repeated in the first half of FY20.
Last week, Coles reported EBIT of $725 million in the first half (pre AASB 16). Supermarkets recorded their 49th consecutive quarter of comparable sales growth, increasing 3.6% in the second quarter. In the early part of the second quarter, comparable Supermarkets sales have remained broadly consistent with the levels achieved in the second quarter.
AGL Energy Limited (ASX: AGL)
AGL delivered half-year results in line with guidance but also advised that full-year results were expected to be towards the upper half of guidance. Full-year underlying profit after tax is expected to be in the range of $780 million to $860 million. This reflects AGL’s solid portfolio performance and customer growth despite the Loy Yang outage, higher depreciation costs and market headwinds.
In the first half, Energy customer accounts increased again, by 36,000, to more than 3.7 million. Profit was down during the half, in line with guidance, but AGL is tracking ahead of expectations. Underlying profit decreased 20% in the first half due to the outage at Loy Yang, increased depreciation after record levels of investment in recent years, lower wholesale energy prices and reduced gas volumes.
Operating headwinds including lower prices for wholesale electricity and increasing fuel costs are expected to remain in play for the second half of FY20 and into 2021. Nonetheless, the AGL share price ended the week nearly 9% higher on the back of its announcement regarding the improved outlook for full-year results.
Goodman Group (ASX: GMG)
Goodman Group upgraded its full year guidance after delivering solid results in the first half. Forecast full year operating earnings per share (EPS) was increased to 57.3 cents, representing an 11% increase on FY19. The deliberate concentration of Goodman Group’s assets in urban logistics locations is delivering strong returns for the group.
During the first half, operating profit increased to $530.4 million, up 14.1% on 1H19, while operating EPS increased 12.9% to 28.8 cents. Earnings from investment, development, and management all increased by at least 10%. Assets under management grew 15% to $49.2 billion.
Goodman Group is focused on specific markets where e-commerce is growing, consumer expectations are rising, and the need for more efficient supply chains is becoming greater. Quality properties in sought-after locations mean Goodman’s portfolio continues to deliver strong rental returns and consistently high occupancy levels.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Kate O'Brien owns shares of CSL Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. 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.