With ASX reporting season now two thirds complete, UBS have run the numbers on how local companies are tracking.

And despite the unprecedented disruption from COVID-19, FY20 “confession season” has so far been relatively tame.

For both stock cohorts the bank tracks — large caps and small caps — the price action relative to results has been less volatile than normal.

UBS it up by concluding that the market “is still willing to look through near-term weakness in earnings due to COVID-19”.

Buoyant market

Heading into August, analysts indicated that markets may be willing to ignore some poor FY20 results in the wake of such a huge disruption.

Instead, the focus would turn more strongly than usual to forward guidance, and how companies expect to perform over the next 12-24 months.

And UBS said so far that has proven to be the case — as evidenced by the fact that stocks which beat expectations for FY20 earnings per share (EPS) rose by an average of 1.8 per cent, but stocks which fell short of EPS forecasts also rose (by 0.4 per cent).

Overall, the median price reaction to full-year earnings results has been a gain of 0.4 per cent — which if it holds through to the end of reporting season would mark the best result since August 2015.

No news is good news

However, while markets have shrugged off some poor FY20 results, there’s also been much more scrutiny around forward guidance.

On that front, the results have also been relatively strong — the median revision for FY21 earnings is -0.7 per cent, which itself is the best result since February 2018.

But broken down by sector, the reaction to negative guidance revisions has been noticeably more severe in some cases.

The UBS category for Industrial stocks (excluding financials) showed that stocks with negative downgrades had been punished (down 5.1 per cent), stocks with upward revisions had seen a similar outperformance (up five per cent).

Interestingly, companies that chose not to provide any guidance at all still managed to post an average gain of two per cent.

Of note, UBS highlighted the strong FY20 numbers for various listed retailers including Kogan.com (ASX:KGN), Adairs (ASX:ADH) and JB Hi-Fi (ASX:JBH) — all of whom have benefited from post-COVID tailwinds such as the shift to online shopping.

However, “the lack of guidance from these stocks suggests this boost to sales is likely to be once-off,” the analysts said.

Here’s a summary of the stocks in the UBS Small Caps bucket — their performance on results day, and cumulative performance since FY20 numbers were announced.

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Ticker Company % Return - results day % Return - since results
IEL IDP Education +29.3% +24.3%
SGM Sims Metal Mgmt +0.3% -3.7%
LYC Lynas Corp +0.8% -3.6%
NWS News Corp +6.3% +11.0%
INA Ingenia Communities Group +1.8% -0.1%
DHG Domain Holdings -1.2% -2.8%
ARB ARB Corporation +5.3% +11.8%
WPR Waypoint REIT +1.5% +2.3%
CCP Credit Corp Group +9.2% +11.9%
BAP Bapcor +7.1% +7.4%
JHG Janus Henderson Group -3.7% -11.5%
EML EML Payments -3.5% -5.4%
MIN Mineral Resources -5.6% -2.0%
NWL Netwealth Group +7.7% +4.9%
BRG Breville Group -7.7% -0.5%
ABP Abacus Property -0.8% +2.7%
MND Monadelphous Group +18.2% +29.5%
MMS McMillan Shakespeare -7.3% +5.2%
CQR Charter Hall Retail REIT -1.4% -0.7%
NWH NRW Holdings +4.9% +15%
URW Unibail-Rodamco-Westfield +3.3% -16.1%
FBU Fletcher Building -0.7% -1.5%
VOC Vocus Group +4.1% +13.7%
SIQ Smartgroup Corp -4.6% -5.6%
PPT Perpetual +3.8% +3.7%
SLR Silver Lake Resources -4.1% -2.9%
SCP Shopping Centres Australasia +3.6% -2.9%
PME PRO Medicus -1.7% +4.0%
BWP BWP Trust +2.0% +0.4%
GOZ Growthpoint Properties Australia +4.3% +4.9%
CLW Charter Hall Long WALE REIT +5.7% +3.6%
IPH IPH -9.2% -11.3%
SSM Service Stream -0.5% +0.7%
GUD GUD Holdings +4.4% +0.4%
TGR Tassal Group -1.0% +5.0%
CIP Centuraia Industrial REIT +0.6% -3.1%
IRE IRESS Market Technology -3.5% -5.5%
GWA GWA Group -9.7% -9.3%
NEA Nearmpap -12.3% +0.4%
IVC Invocare -1.3% +2.4%
SXL Souther Cross Media -2.3% +3.8%
VEA Viva Energy +0.5% -2.7%
MP1 Megaport +5.6% +8.5%
CTD Corporate Travel Management +9.9% +13.6%
WEB Webjet +6.9% +3.5%
HLS Healius +0.3% +0.3%
ING Inghams Group +3.0% +3.0%
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