With another reporting season done and dusted, many analysts and investors are taking a moment to review the overall trend from the past month.
The Australian Broadcasting Corporation recently quoted some initial figures compiled by broker UBS which made for interesting reading:
- Market wide earnings per share (EPS) growth in FY 2015 was just over 12%
- Strip out the miners and the EPS growth fell to 9%
- Stripping out the financials and EPS growth for the remaining industrials dropped to just 3%
- Cost-out initiatives were the primary driver of EPS growth, not revenue expansion
- UBS is forecasting an EPS growth rate for the market of 5.5% in FY 2015 with risks to the downside
UBS also identified a handful of companies which the broker considered reported strong results, they included Tabcorp Holdings Limited (ASX: TAH), Cochlear Limited (ASX: COH) and Caltex Australia Limited (ASX: CTX).
- Tabcorp reported an increase in revenue of 1.8% and growth in underlying profits of 7.4% which was ahead of consensus estimates. During 2014 the group expanded its operations into the ACT through the acquisition of ACTTAB from the Territory Government for $105.5 million.
- While Cochlear's headline results weren't overly impressive with revenue only growing 7% and profits declining by 29%, the second half result showed a marked improvement and benefitted from earlier product releases.
- At I wrote here, Caltex Australia Limited (ASX: CTX) reported a very credible half-year result that showed its marketing and distribution divisions are performing strongly and its business overhaul is proceeding to plan.
Caltex the pick of the bunch
Of these three stocks, Caltex is the one which is on my radar. While the other two are quality businesses, I think it is already fully reflected in their share prices. In contrast, Caltex still has significant restructuring and operational improvements to make which should provide a meaningful upturn in earnings in the coming years.
