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27 February 2008
The mood among analysts at the start of the latest profit
reporting season was decidedly nervous. With the U.S. economy
starting to falter, debt markets choking and local interest
rates on the rise, analysts were more fearful than hopeful.
This caution is clearly reflected in their profit estimates.
In July 2007, FY08 earnings were
expected to be around 12%; by December 2007, that figure was
down to 8%.
Yet on most indicators, the actual
results were probably slightly better than anticipated. Of
the 191 companies we have analysed, median revenue was up
an average of 14.2%, pre-tax profits climbed 13.9% and net
profits rose 9.7%. That's well down on the 21.4% growth recorded
in the half-year to Dec-06 but still respectable in historical
terms.
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Summary for the period ended:
Dec 2007
|
|
| Number of companies in sample |
191
|
| Median sales growth (%) |
14.2
|
| Median pre-tax profit
growth (%) |
13.9
|
| Median net profit growth (%) |
9.7
|
| Median EPS growth
(%) |
6.8
|
| Median net margin (%) |
10.0
|
| Median dividend yield
(%) |
4.1
|
| Average share price reaction
(%) |
0.72
|
|
The reaction of share investors
has generally been favourable too with stocks rallying an
average of 0.72% on the day of their profit announcement.
On balance, the picture is similar to last year with 54% of
stocks rising when their results are released, 34% falling
and about 12% remaining steady.
The only other slight negatives
were the downtick in net profit margins - which fell from
12.2% to 10.0% - and the deteriorating trend in earnings per
share (EPS) growth.
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