We are now in the middle of reporting season with reports coming thick and fast. So far there have been some hits as well as misses.
Today has shown what can happen when shares don't meet the expectations that are set.
The Domino's Pizza Enterprises Ltd. (ASX: DMP) share price is down by almost 3%, having been down much further in the morning.
The Challenger Ltd (ASX: CGF) share price is down 3.5%, it has also recovered somewhat from this morning.
The Cochlear Limited (ASX: COH) share price is down nearly 4%. It too has recovered during the day but it's still down.
Admittedly, Domino's didn't meet its own guidance and Challenger came in at the bottom of its own guidance. But it shows that share prices will be punished if businesses don't reach expectations.
Some other businesses like Altium Limited (ASX: ALU), a2 Milk Company Ltd (ASX: A2M), WiseTech Global Ltd (ASX: WTC) among others are priced highly. Could they be on course for a fall when they report? Maybe. I wouldn't want to buy any shares until after they have reported.
It can be a dangerous game trying to guess if share prices will go up or down on the report. If you invested in Challenger or Altium with where the businesses will be in FY25 in mind then does it really matter what happens in FY18 or FY19? Arguably it doesn't matter in the long-term.
Foolish takeaway
Remember that investing is a marathon not a sprint. One report hopefully doesn't change your investment thesis. The market doesn't care if you own a particular share or not. The only thing you can control is the price you buy at and sell at.
