AFTER THIRD QUARTER EARNINGS SEASON, WHAT NEXT?
What should investors seek from the just
concluded earnings reporting season which is
third quarter reports for December year- end companies and second quarter for march year end company,
while September year end companies are expected to release their full year
ended September 30, 2017 before the end of the year.
How should investors position for robust
returns? Let me share a few lines here.
Go back to the performance of previous quarters
to review the pattern within the current financial year of any company in
question.
In other words, what has the earnings trend been
like in the last two or three quarters?
Please note that companies with consistent incremental performances are most suitable for investment purposes as the probability of a better last quarter performances are higher in those. You might choose to dwell on the reasons for the inconsistent performance patterns, including the fact that some companies do have cyclical sales trends for which reason the quarterly performances are bound to vary sharply.
Please note that companies with consistent incremental performances are most suitable for investment purposes as the probability of a better last quarter performances are higher in those. You might choose to dwell on the reasons for the inconsistent performance patterns, including the fact that some companies do have cyclical sales trends for which reason the quarterly performances are bound to vary sharply.
Take note of such stocks and act accordingly.
Add up the three quarter earnings that you now
have to see what the average performances would be. Or better still, find the
average of the last four quarters, that is, add the three quarters of current year and the fourth for previous year, then
divide your answer by four to get the average. This is important to project
what the dividend possibilities are. To do this right, you might now need to
consider previous year’s performances to see any similar trend or divergence.
Companies with identical trends with previous years’ performance level are
easier to project than those with divergent trends. In cases of divergence,
seek to know what the issues are so as to take advantages or cut your loss
swiftly.
The industry wherein the companies you are
researching operate is key. For example, manufacturing concerns tend to release
audited reports to the market faster than banks and insurance stocks. Equities
like Vitafoam, Forte Oil, United Capital, and Nestle as well as in some cases,
Cadbury are known to be among early fliers in the market every year, as their
results often hit the market between four to eight weeks after the end of the
financial year.
The reason is not far-fetched: Such companies do not present
their financials to a regulator for approval before being released to the
market, unlike banks and their insurance cousins particularly whose results go
through the Central Bank of Nigeria or the National Insurance Commission
(NAICOM). Over the last three financial years most insurance companies have had
to grapple with new challenges posed by the new international accounting
standards, which the banks had to contend with long before now.
Summarily, note the period to expect the audited
result with the release of the third quarter result and position right.
Please note also that quarterly results alone
will not determine equity prices even in the very short-term, as a result,
learn to keep tab on the prevailing market situation to measure the probable
impact of the third quarter performances on stock prices. In other words,
positive earnings in an uptrend will most probably lead to further uptrend,
while positive earning in a downtrend might not impact much. Negative earning
in an uptrend won’t move price up in as much as the decline might not be sharp.
Ten per cent price circuit will propel a fast
reaction to earnings report, leading to early equilibrium price level in
response to earnings.
The implication of this is that positive results
might not experience a bull run for more than a week after which profit takers
will besiege the market to slow down price activities, ditto negative earning.
The best every investor must learn to do at this point is to be
technical-analysis compliant for the best of short term market play in
anticipation of quarterly and full year audited reports.
Investors who may not be desirous of technical
analysis skill could be shooting themselves in the foot because they might be
buying at the end of an initial rally in response to positive earnings as
profit takers dump stocks on them while traders will re-enter when audited
report are near, in equities where projections of final dividends are likely to
be positive.
The closure
and payment date for third-quarter interim dividend paying companies are below
|
Period
|
Amount(N)
|
Closure Date
|
Payment Date
|
NB
|
Sept-30- 2017
|
1.00
|
Nov-16-2017
|
Nov-23-2017
|
Nestle
|
Sept-30- 2017
|
15.00
|
Nov-27-2017
|
Dec-11-2017
|
Total
|
Sept-30- 2017
|
3.00
|
Dec-4-2017
|
Dec-18-2017
|
Note Qualification date for Total Nigeria Plc
dividend is December 1, 2017
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Omordion
CRO | Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
CRO | Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
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