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Reporting season in Australia

Reporting season is a 2-week or so period where investors can see the results for a large number of publicly traded companies.

In simple terms, the reporting season is when companies disclose their performance to investors, offering a clear picture of their business health.

It's a pivotal time when high-performing companies take a moment to celebrate their successes, while those falling short are held accountable.

This period is crucial for the financial market, providing investors with vital insights into the companies they have stakes in. It guides informed decision-making, highlighting potential investment opportunities and areas to be cautious about.

What is reporting season?

Reporting season? It's that time of the year, happening twice, when all those companies trading on the stock market give us the lowdown on how they're doing.

Think of it as a report card day for businesses. Around late January or early February, they dish out the details on their half-year hustle - the wins, the losses, and what they're planning next.

Then, roll around late August, they do it all over again for the full year. It's a pretty big deal for anyone who's got skin in the game, as it helps figure out if those investments are really paying off.

What information is disclosed within the reports?

During the reporting season, companies release information on their earnings, profits, losses, and other pertinent financial details such as the dividends they intend to pay.

These financial reports are like a deep dive into a company's money matters. They are detailed, checked over by auditors, and give you the full scoop on how the company's doing. It's like a health check-up but for the company's finances.

These reports show you the nuts and bolts of a company's cash game. It's pretty much a behind-the-scenes look at how the company's being run, financially speaking.

Some of the documents within a financial report include:

  • Cash flow statements
  • Income statements
  • Balance sheets

Key points to note for 2024

  • Mandatory sustainability and climate reporting. Starting in July 2024, Australian companies will be legally required to report on various ESG factors, aiming to increase transparency and responsible business practices.
  • Phased implementation of reporting requirements. The reporting requirements will start with 'Group 1 entities' in the 2024-25 period, targeting larger entities first, and will extend to smaller entities over the following years.
  • Alignment with international standards. Australia's climate-related disclosure rules align with international frameworks like ISSB, focusing on governance, strategy, and risk management, including greenhouse gas emissions reporting.
  • Scope of disclosures. Companies will need to disclose detailed transition plans and climate-related risks and opportunities, including scope 1, 2, and material scope 3 emissions.
  • Global trend and business readiness. This initiative is part of a global trend toward mandatory climate reporting, and Australian businesses are encouraged to prepare by aligning their practices with these new standards​.

Reporting season rundown: When companies show their cards

In the world of Aussie stocks, February is the time when companies share how they did up until the end of December. Then, come August, it's round 2 with updates on everything up to the end of June.

Now, over in the US, they've got something similar but they call it earnings season, and it's a bit more of a regular show, happening 4 times a year.

Here's the lowdown: About 2 weeks after each quarter wraps up, companies start sharing their latest financial details.

That means post-December figures pop up around mid-January; April's when you hear about the March quarter; July for the June quarter; and come October, it's all about the September quarter.

Note: In February 2024, one of the major upcoming earnings reports to look out for is from Amazon.com (AMZN). Amazon has not yet formally confirmed its next earnings publication date, but the estimated earnings date is set for Thursday, 1 February 2024.

This estimation is based on the company's previous year's reporting dates. In their last earnings report on 26 October 2023, Amazon reported $0.85 earnings per share (EPS) for the quarter, surpassing analysts' consensus estimates of $0.58 by $0.27. The company earned $143.08 billion during that quarter, compared to the consensus estimate of $141.53 billion.

Why do investors worry about it?

Whether you're a short or long-term investor, reporting season is one of the most important periods of the year.

Reporting season is a great way for investors to get up-to-date information.

It gives them a snapshot of a company's financial health and its long-term outlook.

Businesses are obligated to show their full accounts allowing investors an opportunity to peek under the hood.

Not only does reporting season allow an investor to see what's going on, but it will also increase peer reviews and media reports on the company. Competing companies will also have to release their information, giving shareholders a holistic view of what they own.

What should you expect?

It is a busy time for professional and retail investors alike.

Investors should prepare for plenty of reading, as every company is likely to release its financial information.

While annual and half-yearly reports aren't the only times a company will announce important information, it is likely to be the only time that every company you own shares in announces at once.

Understand short-term moves

Reporting season is sometimes called the expectations season. Analysts will give forecasts based on previous updates and the sector as a whole.

If a business outperforms its expectations it will often follow a rise in share price. Failure to at least meet expectations will usually result in share prices falling.

As such, the reporting season can certainly be a volatile time, especially for investors in small cap companies.

Creating opportunities for investors

Reporting season also creates opportunities for investors to find either new companies or take advantage of sluggish share prices.

While the market is forward looking, businesses can become undervalued if they have a short-term issue that can be solved.

It also allows investors to see what else is out there.

They should be able to see the winning sectors and potentially add these winners to their portfolios.

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