As we pass the peak of reporting season, it's apparent there have been "more beats than misses".
That's according to Wilsons equity strategist Rob Crookston, who reckons ASX companies that have exceeded expectations have outnumbered disappointments by 2-to-1.
"However, this positivity has not extended to upgrades for FY24," he said in a memo to clients.
"There appears to be a growing sentiment that FY23 might be peak earnings for some stocks and sectors, such as retail and the banks."
He named two S&P/ASX 200 Index (ASX: XJO) shares that are going well in the face of this pessimism:
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Strong result from a company willing to step out from comfort zone
Industrial real estate manager Goodman Group (ASX: GMG)'s 2023 financial year was a "good result that gets better", according to Crookston.
"Goodman Group remains one of our preferred real estate exposures with low gearing and a track record of achieving above-market EPS growth.
"Investors should be exposed to in-demand sectors, such as Goodman's logistical warehouses, with high occupancy and tight supply that should continue to drive organic rental growth."
The company is proactively diversifying out from its warehousing real estate by developing data centre facilities capable of 3 to 4 gigawatts of capacity.
"To put this into perspective, this could be ~10% of the total GWs used globally in 2030," said Crookston.
"This is expected to hold an approximate end value of $30 billion. Around 30% of Goodman Group's ongoing development projects, valued at a total of $13 billion, are dedicated to the development of data centre facilities."
He admitted the 2024 guidance was "slightly below consensus".
"However, Goodman Group tends to underpromise and overdeliver, so we see upside risk to guidance over the next 12 months.
"Goodman Group [share price] still looks reasonable at a fwd PE of 21x with 9% annual earnings growth over the next 3 years, with upside risk to earnings due to data centres."
Raising prices, but not losing customers
Crookston called Telstra Group Ltd (ASX: TLS)'s annual result "solid".
"FY23 EPS beat expectations, while the FY24 guidance was consistent with consensus."
The mobile market is much more rational now than it was a few years ago, so Telstra has been able to slip in price rises.
"We expect ARPU [average revenue per user] to continue growing over the next 12 months.
"This was a driving factor behind the company's robust guidance regarding price adjustments."
Despite the extra burden on customers, the telco has been able to hold onto its subscriber base, and even expand market share.
"This growth trajectory remains a core focus for the company as it moves into FY24, further reinforcing the strength of its service and its position within the mobile market."
Crookston confessed he was disappointed with Telstra's decision to postpone the sell-off of its fixed line infrastructure.
"Although an InfraCo sale was not the sole reason to hold the stock, it was a significant near-term opportunity for a revaluation uplift," he said.
"We think the stock still looks reasonably well priced at 7.6x for ~7% FY24 EBITDA growth, and continue to see earnings upside from ARPU over the next 12 to 24 months."
