Dividend yield and companies' outlooks are likely to be the
focus of investors when the financial reporting season gets
fully under way in New Zealand and Australia next week.
With low interest rates at the bank, more cash is flooding
into the equity market as investors seek better returns, with
the emphasis on dividends.
Craigs Investment Partners broker Peter McIntyre said company
outlook statements and earnings expectations would be at the
forefront of investors' minds.
''Earnings expectations are, on average, relatively upbeat
with most companies expected to grow their earnings,'' he
Globally, share markets had rallied in recent months, with
some improvements in key economies and better central bank
support prompting more positive investment sentiment.
Forsyth Barr broker Peter Young similarly predicted a
resumption in positive earnings growth for the market, noting
the reporting season was dominated by companies releasing
first-half 2013 results.
Forsyth Barr analysts were forecasting median revenue growth
at more than 3%, earnings before interest and tax at more
than 7% and earnings per share growth at ''a healthy 8%''.
Earnings growth forecasts by Craigs for 2013 on the NZX50
overall is 10.7% and on the ASX200, 7.9%.
''Generally, we're expecting a solid reporting season which
will highlight the local market's resilience. Many of the
good-quality companies remain profitable, well capitalised
and with growth options,'' Mr McIntyre said.
During the past two years, several companies had shied off
releasing detailed outlooks because of a mix of global
volatility, the strength of the New Zealand dollar and myriad
unsettling sovereign debt issues around the world.
In the next fortnight reports will be issued by Sky City,
Steel & Tube, Cavalier, the NZX, Freightways, Property
for Industry, Mighty River Power, Fletcher Building and Trade
Earnings growth for the 20 largest companies on the NZX50
(excluding dual-listed ASX stocks) was forecast at 8%, then
rising to 9% in 2014, with 36 companies of 46 with positive
growth this year, rising to 41 companies next year, Mr
He predicted that in New Zealand, positive results could be
expected from Fletcher Building, NZX, Summerset, Trade Me,
Pumpkin Patch and Port of Tauranga, but there were risks of
disappointment from Sky TV, Steel & Tube and Hellaby
In Australia, Mr McIntyre picked positive result expectations
from IOOF Holdings, BHP, Seek and Woodside Petroleum, but
investor disappointment from Newcrest Mining, QBE Insurance,
News Corp and Computershare.
Most investors appeared realistic and recognised that much of
the recent rally was due to the relative value in equities
(compared to bonds), a rotation into risk assets and a lower
likelihood of extreme market events, rather than any tangible
uplift in earnings expectations.
''However, such a strong run still raises the bar and poses
risks for companies who risk disappointing the market and
missing expectations,'' Mr McIntyre cautioned.