I have noticed over the years (and now have the hard evidence) that how the majority of stocks move on day 1 of their results generally determines where it will be 4 months later.
This is something I wrote about on Livewire in the February reporting season, and since then the argument has only got stronger based on data from the February reporting season, shown below:
Source Coppo Report
We can see that the beats were a lot better than the misses. As you’d expect the stocks that “beat” were up on day 1, and were up by +6.7%. Then 4 months later (ie as at 15th June 2018) they were up +13.70%.
In other words, they have rallied another +7% since reporting. The ASX 200 rallied +2.7% over this same time.
The Misses were smacked -7.4 % on the day they reported, but improved by +2.7% to be down just -4.8% 4 months later. But they have been helped by the fact that the ASX 200 rallied +2.7% in the 4 mths since that Feb Reporting season.
Also of interest is that these stocks (misses) had the highest short interest (2.8%), so it looked like the shorts were more correct on these.
The 25 companies that beat expectations so far...
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This article is based on excerpts from The Coppo Report contributed to Livewire by Richard Coppleson, Director - Institutional Sales and Trading, Bell Potter. You can find out more by clicking here.