Top 5 ASX stocks to watch this earnings season

• Top 5 ASX stocks to watch this earnings season
• Earnings + consensus expectations
• Other points of interest
• Australian earnings season summed up

After the volatility of 2020, this year’s corporate earnings season is likely to be a more subdued affair. The ASX 200 benchmark has continued to rise steadily into the leadup and during August, with the index surging past the 7,500 point mark on 5 August. At those levels, the benchmark is up some 836 points or 12.51% YTD, as investor confidence returns and macroeconomic conditions remain accommodative.

In saying that, while many ASX-listed companies have benefited from improved economic conditions over the last 12-months – and seen corresponding share price increases in response – with the emergence and spread of the delta covid-19 variant, the market is also likely to place an extra keen focus on company guidance.

Top 5 ASX stocks to watch this earnings season

With that in mind, below we examine five high profile ASX-listed companies and provide technical analysis and insight from IG Market Analyst Kyle Rodda on their recent share price performance and outlook. These companies include:

• Afterpay (APT)
• Commonwealth Bank of Australia (CBA)
• CSL (CSL)
• BHP Group (BHP)
• Fortescue Metals Group (FMG)

The below two tables summarises the specific dates of each company’s upcoming earnings reports as well as key earnings expectations that investors and traders should be aware of:

Reporting dates

Earnings + consensus expectations

You can trade any of the five stocks discussed today – long or short – with an IG Account. Click here to open an account with us here.

Where this article refers to the top Australian shares, these are stocks based on the view of IG Market Analysts. Note that we do not give financial advice. Remember, the best stocks for you will always be ones underpinned by your own thorough analysis of both the company and the market.

Afterpay share price: +6.15% YTD

Australia’s corporate earnings season kicked off with a surprise last week, with Afterpay reporting both a stellar set of FY21 numbers as well as revealing it was being acquired by US-payments giant, Square – in a deal valuing the company at over $39 billion.

That move shook investors, Afterpay’s share price surged in response, and many onlookers took a victory lap for this startling Aussie success story. We take a deep dive into that mega-deal here.

Yet beyond Afterpay, a number of high profile companies are still set to report their full, half-year and in some case quarterly results in the coming weeks.

• Price remains in a long term uptrend, but in the shorter-term remains well off all-time highs and is showing signs of consolidation.
• All key moving averages are beginning to converge, with price currently oscillating around the implied valuation of the Square Inc. takeover bid
• The noteworthy levels of support and resistance are currently around $106 and $95 on the downside, and $130 and $150 on the upside.

CBA share price: +25.94% YTD

Next week we will see the Commonwealth Bank of Australia unveil its full-year results. Investors will likely be keen to see CBA maintain the strong growth it recorded in the third quarter, after the bank reported unaudited profit growth of 24% in Q3, while also booking above system lending growth across all of its key lending segments.

Despite that, with Sydney recently falling into lockdown, any commentary around the potential impact that such measures may have on the bank’s credit quality or on the possibility of further loan loss provisions will likely be a priority for investors.

We unpack some of the key things every trader and investor should know before the FY21 release here.

• Technicals point to a clear uptrend for CBA shares, with the daily RSI also establishing a series of higher highs and lower lows, that affirm upward momentum
• Price remains below all-time highs, however is finding support from trendline support, with the series of higher highs and lower lows suggesting another retest of those levels are in view
• Some of the key short-term moving averages however are pointing to slowing price momentum in the immediate future.
• A break below trendline support and support at $95 would portend a potential end to the uptrend

CSL share price: +3.75% YTD

In the third week of August we will get the full-year results from CSL, Australia’s third largest publicly-listed company. After trading sideways over the last six-months, investors will likely be looking for positive commentary around the performance of CSL’s US collection centres, which have come under pressure as a result of the pandemic.

Second, despite management telling that the full-year results would be skewed to the first-half, during its H1 results, CSL modestly raised their FY21 full-year earnings expectations, bumping its lower-end NPAT guidance from US$2,100 million to US$2,170 million. The top-end of the NPAT guidance remained unchanged at US$2,265 million.

• The primary trend in CSL shares is currently to the downside, having trended lower throughout the pandemic period
• In the shorter term, price is clearly countertrending as it grinds into resistance around $295
• There are signs of a looming break to the upside, with the daily RSI pushing back above 50, and price above the key 20, 50, 100 and 200 day moving averages
• Key resistance can now be found at around the downward sloping trendline around $300, as well as prices previous lower high at around $307

Large-cap miners

Finally, during the latter part of the season, we will get full-year results from mining giants BHP Group and Fortescue Metals Group. With iron ore facing heavy selling pressure in recent times, in the short-term falling into a bear market, as well as inflationary pressures emerging, the market will likely place an increased focus on the costs outlook for both companies.

Beyond such concerns however, cash generation remains high for both companies, and the expectation remains that the likes of BHP and FMG will dish out handsome dividends to investors. This comes after Rio Tinto broke records in late July, dishing out an interim dividend worth more than $9 billion – a record payout for the company.

BHP share price: +22.18% YTD

• The trend for BHP shares remains bullish, with price hovering close to record highs
• A recent break out from resistance around $51 per share saw upside momentum build, with price currently above the key 20, 50, 100 and 200 day moving averages
• The RSI however is indicating a bearish divergence, and price is retesting former support now resistance at its break-out level
• The primary trend remains constructive for BHP shares, however if support at $51 break, it may open a retest of trendline support around $48.30

FMG share price: -2.43% YTD

• Fortescue shares are clearly in an uptrend, however that trend is currently looking at risk of breaking down
• Price has seeming registered a double top around 26.30, while the daily RSI has plunged from overbought levels to now below 50, suggesting waning upside momentum
• Price is now finding support at the upward sloping trendline of its primary trend. If that level is broken, it opens up a test of support 20.80 and 18.80, and may indicating a budding trend reversal

Other points of interest

Other companies traders and investors may consider worth watching this earnings season are listed below:

Australian earnings season summed up

• Expectations have become increasingly more elevated into August, with the ASX 200 benchmark up over 12% since January.
• Investors will likely place a greater emphasis this earnings season on how the delta covid-19 variant may impact FY22 guidance and the outlook for ASX-listed companies
• Afterpay, CBA, CSL, BHP Group and Fortescue Metals Group are likely to be closely watched by investors this earnings season, given their recent share price performances and overall market weightings
• You can trade any of the companies we have discussed today by creating an IG trading account here.

^Footnotes:

^{1. ​​Data from the Earnings + analyst expectations table taken from Bloomberg.}

^{2. All earnings dates provided are estimates and may be subject to change.}