Reporting season: don’t be blinded by the figures

Font size :
It’s reporting season once again, and it’s very interesting to keep an eye on which companies report profits, and of course, which have experienced losses.
This week we saw two of Australia's most important and iconic companies post their profit results for 2010-11, and both cited the AUD’s strength as a factor behind their gains.
Yet, the similarities end starkly there. Qantas reported $260m in profits, yet this seemed positively puny compared to industry megalith BHP Billiton who reported a staggering and record profit of more than $23bn.
Earnings season is a fundamental time in any investor’s calendar, and serious stock market investors should closely observe the reports of each and every stock they hold – and while you’re at it, keep an eye out for potential buys.
Some small scale investors head into earnings season unsure of exactly what they should be doing. The knee-jerk reaction for some may be to buy-buy-BUY! However, there is much more to buying shares in companies posting profits than meets the eye.
Sometimes stocks fall in price after reporting profits, while others rise on sub-standard results.
Indeed despite doubling its earnings from last year, CEO Alan Joyce said of Qantas this week “The current share price is quite frankly disappointing. It does not however reflect the full value of our business today and the high potential for tomorrow.”
Likewise, BHP’s share price has also experienced unimpressive gains since its profits announcement.
The upshot?
We’ve all seen the headlines: companies have been doing it very tough of late due to generally slow moving business conditions and tensions in the global market.
Many investors try to achieve double-digit returns by randomly choosing fast-moving shares, blindly following trends and generally taking on too much risk. When we don't quickly earn double-digit returns it’s disappointment all round; when we lose money we are mortified.
A word of caution lies behind resource stocks that may be too highly leveraged, especially given the current climate in the manufacturing industry. The market may indeed correct resource stocks whose outlook statements have reflected more subdued conditions.
Dabbling a little or a lot in the share market can be a volatile game. If you think it’s possible to make overnight gains after profit announcements, though it can happen, think carefully and cautiously before entering the still recovering market and seek professional advice before shaking up your portfolio.

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Thursday, Sep 21, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords