S&P/ASX Small Ordinaries Index (ASX: XSO) shares are in the green on Monday, up 0.5% to 3,323.9 points.
ASX small-cap shares outperformed in FY26. The index rose 5.46% and delivered a total return, including dividends, of 8.11%.
This compares with a 2.43% rise and a 5.69% total return for the S&P/ASX All Ordinaries Index (ASX: XAO).
This week, experts are calling time on three ASX small-cap shares.
Let's find out why (courtesy The Bull).
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Judo Capital Holdings Ltd (ASX: JDO)
The Judo share price is 95 cents, up 1.3% on Monday and down 39% over 12 months.
The ASX small-cap bank share took a big hit last month after Judo issued a profit guidance downgrade.
Mark Elzayed from Investor Pulse explains his sell recommendation on Judo Capital shares:
Judo recently cut profit before tax guidance in fiscal year 2026 to between $163 million and $169 million from a previous range of between $180 million and $190 million.
It was primarily driven by a higher cost of risk now expected to range between $116 million and $122 million following specific provisions against three exposures across different sectors.
Profit before tax guidance of between $210 million and $220 million in full year 2027 was below market expectations of $255.1 million.
In our view, market reaction reflects more than a one-off potential earnings downgrade.
Provisioning risk remains elevated, so we retain a sell on Judo Capital.
Forrestania Resources Ltd (ASX: FRS)
The Forrestania Resources share price is 38 cents, down 3.8% today but up 192% over 12 months.
Elzayed also gives this ASX small-cap materials share a sell rating, and commented:
FRS is a gold exploration and development company focusing on building quality projects across Western Australia's mining districts.
FRS announced on July 1 it had received binding commitments to raise about $310 million for the Edna May Gold Hub. The company's objective is to have Edna May fully commissioned and operational in the first half of 2027.
An institutional placement of 775 million shares was priced at 40 cents. The placement is shareholder dilutive and gold prices remain under pressure, in our view.
The shares have fallen from 64 cents on May 18 to trade at 39 cents on July 15.
Readytech Holdings Ltd (ASX: RDY)
The Readytech share price is $1.61, down 0.3% today and down 33% over 12 months.
Nathan Lodge from Securities Vault explained his sell rating on this ASX small-cap tech share:
An unsolicited, non-binding indicative proposal to acquire ReadyTech Holdings was rejected by the RDY board on June 1, 2026.
The RDY board concluded that the $2 a share cash scheme arrangement and a parallel off market bid of $1.75 a share didn't reflect the company's inherent value and wouldn't be executable. The shares were trading at $1.61 on July 15.
ReadyTech has built a quality software business with recurring revenue across education, workforce management and government solutions.
However, I believe much of the company's long term growth potential is already reflected in the share price, limiting scope for further upside in the near term. ReadyTech operates in highly competitive markets.
