Full guide to 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.
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In layman's terms, it is a time when companies let investors know how the business is going.
It lets companies who outperform do a victory lap while forcing CEOs that miss expectations to face the music.
It is arguably the most important period for the market as a whole as it allows investors to actually see what is going on in the businesses they own and lets them know what they should be buying.
What is reporting season?
As part of their diligence to shareholders, twice a year, listed companies have to update the market on their performance including earnings, results and forecasts for the future.
Almost every company listed on the ASX will report their half-year financial results in late January/early February and their full-year results in late August.
When is it?
In February investors will get results up until 31 December while in August businesses will release their stats up to 30 June.
In the United States reporting season is known as earning season and it happens 4 times a year.
As a rule of thumb, each earning season begins around 2 weeks after the last month of each quarter.
So the December quarter will see results released by mid-January, the March quarter in April, June quarter in July and the September quarter in October.
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 for an investor to see what's going on, it will increase peer reviews, media reports on the company and competing companies will have to release their information, giving shareholders a holistic view on what they own.
What should you expect?
It is a busy time for professional and retail investors alike.
Investors should prepare themselves for plenty of reading, as every company they own is likely to release their 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 makes an announcement at once.
What are some of the main things you look out for during reporting season?
Investors will have to deal with a lot, because all of the 2,500 companies will announce results.
But within the mayhem of reporting season are great opportunities.
To help out, Finder asked IG's analyst Kyle Rodda what investors should be looking for during reporting season.
"For me its growth and margins," he said.
"It depends which corner of the market you look, but I think the broad themes are similar. We are moving into an environment of more moderate growth, and that's been compounded by Omicron and the hit that will probably have on profits.
"On top of that, businesses are contending with a higher cost environment, which means margins could be compressed. If there are hurdles to earnings this quarter, it will probably be these factors."
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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