Earnings misses punished in mixed start to profit season

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Investors are already digesting a string of earnings reports for pointers as to the early winners and losers this earnings season.

A string of disappointing results and profit downgrades sent share prices tumbling in the first week of ASX reporting season as investors showed they’re prepared to punish missed expectations.

Analysts are prioritising outlook statements this reporting season as they search for clues about how companies will fare amid difficult economic conditions.The tech company reported a 69 per cent fall in underlying EBITDA to $US8.9 million for the first six months of the year on weaker digital advertising demand and macroeconomic challenges. This was 67 per cent below analyst consensus, according to RBC Capital.

Meanwhile, shares in Afterpay-owner Block fell 6 per cent on Friday despite reporting 29 per cent growth in gross profits year-on-year. DNR Capital analyst Chris Tynan described the result as “solid” but said gross profit growth wasn’t as high as the market hoped, with some disappointment in buy-now, pay-later.

 

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What investors should watch for this earnings seasonStrategists will prioritise company outlooks as they try to gauge how businesses will handle increased economic uncertainty.
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