Companies listed on the Australian Securities Exchange (ASX) report their earnings at least twice a year.
Reporting season provides an opportunity for analysts, traders and investors to review earnings reports, and some companies provide forecasts about how they expect the company to perform in the short term and the long term.
There’s lots of information and making sense of it can sometimes be time consuming.
However, investors shouldn’t get distracted by the huge amounts of information that becomes available during company reporting season, according to Stuart Fechner who is head of research relationships at Bennelong Funds Management.
“Reporting season isn’t the ultimate decider of winners and losers,” Fechner said. “Recognising a company’s aims and responsibilities during reporting season will help investors better understand what impact there may be on their portfolio.”
Here are some key things to know about reporting season.
Why do companies report twice a year?
ASX-listed companies must report their financial results to shareholders at least twice a year, within two months of the end of their balance sheet date.
As most companies have balance sheet dates of 30 June, the main reporting season takes place in August when companies release their full-year results. Half-year results are released in February.
Not all companies report during these periods as not all have balance sheet dates at the end of June.
A company’s website will often have information about when it is scheduled to release earnings reports.
What information is released?
Most companies release several documents to help shareholders and analysts in their assessment of information.
The main document is the statutory result, often called the ‘preliminary final report’. Some companies release their annual report at the same time.
Companies can also distribute a results presentation, and management might give real-time presentations either face-to-face or by conference calls to analysts and media.
Why is reporting season important for investors?
The best way to gain conviction about stocks owned - both for upside potential and downside risk - is to put in the research, Fechner said.
“Reporting season is one of the few times investors get tangible feedback from the market. This isn’t just about a company’s previous performance,” he explained in a release. “Understanding projections for the coming financial year is as important as the result itself.”
What are the risks?
It is important for investors to understand that past performance is no guarantee of future performance. The value of your share holdings and your portfolio overall can go up and down over time.
As a shareholder, or would-be shareholder, it's important to know as much as you can about a company's financial health to inform your views about its potential to perform in line with your investment strategy.
You can follow daily coverage during reporting season with CommSec.
Things to consider: This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia. The commentary provided from external companies that are not a member of the Commonwealth Bank of Australia Group of Companies (the CBA Group), including but not limited to Bennelong Funds Management, does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. Neither Commonwealth Securities Limited nor members of the CBA Group accept any liability for losses or damage arising from any reliance on external companies and their products, services and material.