My top 4 results from earnings season

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With the February earnings season coming to a close, it’s become clear that, despite a whole lot of pessimism regarding the state of the economy, many listed Australian companies are doing well. Very well indeed.

Of the companies I personally keep an eye on, here are four that outperformed my expectations for the first half of FY2018.

Corporate Travel Management Ltd (ASX: CTD) delivered another strong half of organic growth, with Europe and ANZ the standout business segment performances. North America and Asia fared less-well, however the outlook for the second half is encouraging and the company is also expecting to benefit from the recently introduced United States tax reform.

Management expects full-year earnings to hit the top end of previous guidance, assuming flat client activity globally, while a weakening Australian dollar is an upside risk.

Webjet Limited (ASX: WEB) was another travel company whose share price shot higher following its half-year results announcement. Webjet’s revenues soared after the company’s business-to-business (B2B) operations exceeded expectations. The company is now looking to capitalise on growth in Asian markets, with further investment in FY2018 that is expected to be profitable from the following financial year.

Bookings momentum has continued into January and Webjet expects an even stronger trading period for the second half of FY2018.

Jumbo Interactive Ltd (ASX: JIN) had only just provided an upwardly-revised business update in January, before its first-half results in February were again higher than expected. Revenues and earnings for the digital-only lottery ticket seller rose 21% and 53% respectively, as consumer preferences continue towards online sales.

Jumbo’s interim dividend was 114% higher than the previous corresponding period, and the company’s cash balance and significant operating cash flow means another special dividend could be on the way.

Management recently stressed that its relationship with Tabcorp Holdings Limited (ASX: TAH), following the takeover of Tatts Group, was its ”highest priority” and that the two entities remain in “close dialogue.” As long as Jumbo maintains its re-seller arrangement, I believe the company will continue to deliver high returns.

Woolworths Group Ltd (ASX: WOW) continues to turn around under the leadership of CEO Mr. Brad Banducci, and the supermarket giant produced its best result in some time this February. Statutory group earnings rose 37.6% compared with the previous corresponding period and the interim dividend was increased by 26.5%.

The Australian Food and Hotels divisions outshone the group’s other segments, although petrol also performed very well, even though Woolies is still trying to sell the business to BP.

If only someone would buy Big W, the troubled discount department store. It recorded an EBIT loss of $10 million for the first half, and losses are expected to blow out to between $80 million to $120 million for the full year.

Although Big W remains a drag on group performance, I also believe it represents an opportunity to unlock further shareholder value in the future, even if that comes in the form of divestment.

 

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