Earnings season might not be over just yet, but it has already produced some pretty interesting results.
While there are always hits and misses, most investors would be pretty satisfied with the results so far considering it was only a few short weeks ago that we were facing a global market meltdown!
Amongst this backdrop of doom and gloom there were a number of companies that delivered spectacular earnings results. Four of the best include:
1. REA Group Limited (ASX: REA) – The online property advertising giant delivered another stellar set of numbers when it released its FY16 first half results. Nearly every financial measure improved from the previous corresponding period with revenues and earnings per share (EPS) increasing by 22% and 28% respectively.
As the chart below indicates, this maintains REA's record of delivering double-digit growth in both earnings and revenues.
The company also maintained its dominance in the domestic market with more than five times the average annual monthly page views compared to its nearest competitor (Domain).
Although its international division did not make a huge contribution this half, its recent acquisition of iProperty Group Ltd (ASX: IPP) and further expansion in Europe and North America should provide ample growth opportunities in the future.
2. Cochlear Limited (ASX: COH) – The bionic ear maker has well and truly recovered from its 2011 recall debacle and its most recent results confirm it is still the market leader in its field.
With the help of the depreciating Australian dollar, Cochlear delivered both sales and profit growth of 32% in the first half of FY16. The company delivered impressive growth in every geographic region with especially strong growth being achieved in the Asia Pacific region.
Shareholders would have also been pleased with a 22% increase in the dividend, but perhaps even more pleased with an upgrade to the company's full year guidance. Management increased FY16 guidance to between $180-190 million which is an 8.8% increase from its previous guidance.
3. Reject Shop Ltd (ASX: TRS) – Shareholders of the discount retailer have witnessed a remarkable reversal in the share price over the last 12 months as the company delivers on its turnaround strategy.
Management have focused on reducing costs, improving operational efficiency and optimising their product mix to improve margins and the results are clear to see.
The Reject Shop delivered same store sales (SSS) growth of 4.4% which was a significant improvement on the -3.3% in the prior corresponding period. This turnaround helped to deliver a 43% increase in net profit after tax (NPAT) and a 51% increase of its interim dividend.
Growth is expected to continue into the second half with several new store openings and SSS growth continuing in the first six weeks of the year to date.
4. Magellan Financial Group Ltd (ASX: MFG) – The international fund manager continues to deliver great results for shareholders and its FY16 first half results did not disappoint.
Despite global market volatility increasing over the last 12 months or so, Magellan managed to increase its average funds under management by 44% to $38.8 billion.
New products and improved accessibility through new agreements with a number of investment platforms allowed the company to receive record average monthly retail net inflows during the period of $214 million, compared to $123 million in the prior corresponding period.
Most importantly for shareholders, this resulted in first half EPS increasing by 41% to 63.7 cents and a rise in the interim dividend of 38% to 51.3 cents per share.
Magellan continues to generate strong performance relative to benchmarks and this is critical in generating performance fees and attracting new funds to manage. Although short term earnings may be impacted by the recent market sell-off, the fund manager remains well placed to deliver superior returns over the medium to long term in my opinion.
