Criterion: As the large-cap oak trees shed branches, overlooked acorns are left to prosper

• This week’s profit reporting round has been unkind to the top end of town, with CSL and James Hardie leading the falls
• Industrial small caps are benefiting from abating cost pressures and robust consumer sentiment
• Companies such as Smart Parking and Life 360 are finding their niche in offshore markets

In the profit reporting season’s busiest week so far, some of our mighty oaks are swaying and a few have shed a few boughs.

Most notably, investors this week chainsawed CSL (ASX:CSL) on the back of lacklustre earnings and a cost cutting program.

Fellow healthcare leader Sonic Healthcare (ASX:SHL) fared little better, while James Hardie (ASX:JHX) shares were hammered on a concerning US housing downturn.

Even more so than usual, the share gyrations diverted attention from worthy stories elsewhere.

While it’s hard to generalise across such a broad and diverse sector, the smaller fry look to be finding their groove amid abating input cost pressures and robust consumer sentiment.

Like raindrops on roses and whiskers on kittens, here are a few of our favourite things from the reporting jamboree to date.

Reckon they are doing OK

While $28 billion market cap Xero (ASX:XRO) is the leader and pioneer in SME bookkeeping, Reckon (ASX:RKN) was in the game much earlier.

The trouble is, it didn’t keep up in the ‘cloud’ and has been playing catch-up.

Reckon’s first half numbers showed a solid migration to the company’s cloud product Reckon One.

Reckon’s revenue grew 16% to $33 million, with Reckon One’s 26% growth leading the way.

The company also has workflow and billings products for the legal sector.

Overall, Reckon reported net profit of $4 million, up 35%.

The shares have crept up 24% this month but the company still only worth $70 million -or about 2% of Xero’s valuation.

Smart Parking looks ‘fine’

As a private parking vigilante issuing citations to overstayers, Smart Parking (ASX:SPZ) now is haunting motorists across the globe.

But for investors, it all looks ‘fine’.

Here, private operators have been stymied from issuing tickets because they are no longer able to go to court to access the addresses of registered owners.

But it’s different in the UK, where Smart Parking has an imposing presence.

The company also has expanded elsewhere, notably in the US via this year’s  $57 million purchase of Peak Parking.

Smart Parking last year issued 1.03 million ‘parking breach notices’ – 750,000 of them in the UK.

This contributed to net profit rising 47% to $5.4 million, on a 42% revenue boost to $77 million.

Ooh! Media is up in lights

Out-of-home (billboard) advertiser Ooh! Media (ASX:OML) benefits from structural growth while other parts of the media pie are shrinking

Maple Brown Abbott small cap whisperer Phil Hudak points to “structural and macro tailwinds”.

These include a greater share of the overall media pie for the out-of-home sector. Ooh! accounts for about one-third of the out-of-home sector and 16% of the overall agency-based ad market.

Ooh! itself recently has secured has several key contracts,  including with Sydney Metro and Melbourne’s Transurban.

Hudak says the industry’s adoption of an  upgraded audience measurement system should “strengthen pricing power and reporting accuracy.”

Capral extrudes value

The country’s biggest extruder and distributor of aluminum products, Capral (ASX:CAA) reported a subdued first half.

This was due to weaker residential, commercial and – for the first time -industrial demand.

However the lull was expected and management expects a better second half spurred by – you guessed – an interest rate led housing recovery.

Capral managed underlying earnings (EBITDA) of $27.7 million, down 3% and has guided to calendar 2025 EBITDA being in line with the previous year’s $58.3 million.

Capral’s $180 million market cap is supported by $53 million of cash and no debt. No wonder the company is in the midst of a share buyback of up to 10% of its register.

Life360 tracking to plan

Spying on your kids seems icky, but the US-focused Life360’s (ASX:360) ethos of keeping the blighters safe is gaining traction with worried-sick parents.

Life 360 shares went tear after the company upgraded full-year revenue expectations to US$462-482 million, from US$450-480 million previously.

Broker Citi dubs this guidance as “conservative” and reckons Life 360 will be a billion-a-year turnover company by mid 2029.

Life 360’s products include family tracking apps and the acquired Tile range for non-human chattels.

The company derives about 85% of its revenues from the US.

With a $10 billion valuation and also Nasdaq-listed, Life 360 is an outsized ‘small cap’ that shows what happens when small acorns are nourished.

This story does not constitute financial product advice. You should consider obtaining financial advice before making any financial decisions