Reporting season is finally over, with the last results trickling into early September.
Now that it's all in the books, it's time to think about the best ASX shares to buy and mentally note the ones to avoid.
To help with this, Bell Direct market analyst Grady Wulff has named her three winners and three losers from this reporting season:
Image source: Bell Direct
Chicken, lithium, and shoes
The three winners, according to Wulff, are:
All three are rated as buys by sister company Bell Potter.
Wulff said Inghams was upgraded to the rating directly as a result of its sensational annual report.
"FY23 saw Inghams report underlying net profit after tax (NPAT) up 68% YoY and ahead of expectations at $71.1 million, revenue up 12% YoY to $3.044 billion and a reduction in net debt to $394.7 million compared to $408.8 million at FY22."
The boom numbers were a surprise, according to the analyst, powered by "a lower-than-expected tax rate, moderating [operating expenses] and volume increases".
"Inghams expects FY24 to include stabilised operational performance and continued improvement in farming operations, feed price stabilisation, and capEx to lift as the company invests in automation."
Mineral Resources also ushered in results that were ahead of expert forecasts, with NPAT rocketing 170% to $769 million.
"[It's] a significant rise from the $284 million of FY22 on increased lithium product volumes and pricing," said Wulff.
"Looking ahead, the major near-term catalysts are updates on Wodgina, and underground mining at Mount Marion. The outlook for lithium remains strong."
The Bell Direct team is impressed with Accent Group even though consumer discretionary companies are out of favour at the moment due to the dark economic clouds.
Accent actually gave out a full-year dividend of 17.5 cents, which is a massive rise from the four cents a year earlier.
"The footwear and sports leisure retailer and wholesaler remains resilient in the slowing consumer spend environment with total sales growing 23.6% on FY22 to $1.57 billion, Accent Group sales of company owned brands up 26.3% to $1.393 billion, NPAT up 181.6% to $88.7 million and EPS up 178.1% to 16.16 cents per share."
Wulff added the Accent Group opened 80 new stores while closing 21 outlets that were not viable.
"Inventory levels were also a key area investors analysed this reporting season and for Accent Group, inventory levels came down from FY22 and clean aged stock levels."
Sleep, software and dairy
On the flip side, Wulff warned that these stocks missed expectations this reporting season:
ResMed is actually still rated a buy by Bell Potter, but there is no doubt it was a "loser" for Wulff.
"The possible driver of investor disappointment was the contraction of ResMed's gross margin by 80 basis points to 55.8%, while non-GAAP gross margin contracted 120 basis points to 56.5%.
"In a rising cost environment, companies that failed to pass on costs to customers were punished this reporting season and ResMed unfortunately fell victim to this through margin contraction."
For WiseTech, its research and development (R&D) costs ended up larger than expected, taking up 32% of the 2023 financial year revenue.
"The increased R&D has also seen the Product Development team increase from just over 1000 at the start of FY23 to 1800 at the end of FY23, accounting for 60% of total headcount," said Wulff.
"The increased costs caused investors to sell out over the weeks post results being released."
The A2 Milk share price was "slammed" because of poor growth prospects in the Chinese economy.
"Incredibly, the premium dairy company reported double-digit growth across most metrics including revenue of NZ$1.593 billion up 10% YoY, EBITDA up 12% to NZ$219.3 million and underlying NPAT up 27% YoY to NZ$155.6 million.
"So why did investors pull out? The outlook for FY24 isn't as bright though with A2M expecting low single digit revenue growth, and flat EBITDA margins."
