Following on from last week, the upcoming week is shaping up to be another pivotal week for share investors as hundreds of companies are set to report their financial results to the market.
While it is vitally important for investors to closely follow the results of companies within their portfolios, investors still need to pay attention to the results of companies from the broader market. This is especially the case for smaller companies that do not receive the same coverage as their blue chip counterparts.
With that in mind, here are three smaller stocks from my watchlist that released positive earnings results last week:
1. Aveo Group (ASX: AOG) – The retirement unit owner and developer generated underlying net profit for the first half of FY16 of $45.6 million, up 89% on the prior corresponding period. This was in line with management's earlier guidance and means the company remains on track to meet its full year FY16 underlying net profit after tax guidance of over $80 million.
Aveo also announced it had acquired another retirement community operator, Freedom Aged Care, for $215.5 million which is expected to be earnings accretive from FY17.
Following the acquisition, Aveo will be operating 95 retirement communities with nearly 17,000 homes, making it the largest owner and operator of retirement communities in Australia.
Investors were clearly pleased with the result and the shares have been trading around 5% higher since the announcement.
2. Folkestone Education Trust (ASX: FET) – Folkestone has consistently been one of the best-performing A-REITs on the ASX with a five-year average annual shareholder return of 31.5%. The company invests in childcare centre properties throughout Australia and New Zealand and has a portfolio of 396 properties.
The company delivered a 13.8% increase in first half earnings to $59.5 million and increased its security distribution to 6.7 cents per unit. Folkestone now expects its full year distribution to come to 13.4 cents per unit which would provide investors with a yield of 6.1% based on the current share price.
Importantly, the company's portfolio has a very high occupancy rate of 99.5% and a weighted average lease expiry of 7.8 years which should support the distribution payout moving forward.
3. Smart Parking Ltd (ASX: SPZ) – Smart Parking is easily the most speculative company on this list with no profits to its name and a market capitalisation of just $80 million. Despite this, it has developed an interesting technology that has the potential for huge global application.
In addition to managing traditional car parks, the company installs ground sensors that have the ability to tell drivers, through their smartphones, where vacant spots are available. The technology also allows the individual parking space sensors to gather and transmit information for management, payment and compliance monitoring.
Importantly, the technology is gaining acceptance through councils very quickly and Smart Parking has recently signed new contracts in Australia, New Zealand, Costa Rica, and the UK.
Although the company is not yet profitable, it is showing very promising signs. Revenue in the first half increased by 47% and there was a $3 million improvement in EBITDA. With no debt on the balance sheet and a growing order book, Smart Parking is definitely a stock to watch for the future.
