Australian earnings this week: the top stocks to watch

Rio Tinto (RIO) - 23rd of February

What are the markets expecting from Rio Tinto?

Like it’s fellow blue-chip mining counterparts on the ASX, BHP and Fortescue, Rio Tinto’s results will be determined by how the company has translated the rebound in commodity prices into profits, and how it sees operational performance going forward, especially as China attempts to jaw bone lower iron ore. For the FY2021, analysts are expected NPAT to have increased to $21.6B. Currently, analysts remain fairly neutral, if not slightly bearish, on Rio shares. Most analysts rate the stock a buy, with 8 recommending that action, while 7 suggest a hold, and 2 a sell. The current consensus price target is at a discount to market prices at $112.28.

Rio Tinto shares remain in a primary uptrend, as recent strength in iron ore prices drives the stock higher. Momentum remains skewed to the upside, with price above the major weekly averages and the weekly RSI trending higher and moving towards the 70-mark. Price is currently consolidating above support at $120, with the next major level of resistance at $130. If prices slip, short-term trend line support may come into view, with the next major level of support below that around $107-$108 per share.

Woolworths (WOW) – 23rd of February

What are the markets expecting from Woolworths?

As the Australian economy has progressively re-opened, sales growth has slowed for Woolworths, as consumer preferences shift back towards services and pre-pandemic trends. Analysts are tipping a drop in profits for the half to $878m, with the company’s dividend tipped to drop to 0.52c. With costs mounting due to supply disruptions to supply chains, higher input costs, and expenses related to wages and pandemic-proofing the business, tighter margins are expected to compound lower revenues and leader to weaker earnings. Right now, analysts are neutral the stock, with 15 analysts split 5-each way on whether to buy, hold or sell. The consensus price target is $36.87.

Technical analysis of Woolworths shares

Having dispensed with its post-pandemic uptrend, which saw profits explode due to increased consumer spending on staples products, Woolworths shares have been trending lower. Momentum is skewed to the downside, with the stock finding some support at $34 per share. A better than expected result from the company could see the share price drive higher towards resistance – around the 200-week moving average – at $36.00. On the other hand, with risk skewed to the downside, a disappointing result might see support at $31.00 coming into view.

Qantas (QAN) – 24th of February

What are the markets expecting from Qantas?

In the pandemic period, Qantas Airways Ltd has been one stock that’s acted as a key re-opening trade. With domestic travel picking up at the end of 2021 and start of 2022, and international borders reopening now, investors are looking for signs of a resurgent demand in air travel, that will bring a significant boost to Qantas’s beaten up profits. Analysts are expecting the company to post a loss for the half of $628.8m, with no dividend to be paid. Despite this, the expected release of pent up demand for travel as analysts bullish the stock. Of 14 brokers, 12 recommend a buy, 1 a hold, and 1 a sell, for a $6.05 consensus price target.

Technical analysis of Qantas shares

Although still well-off pre-pandemic levels, Qantas Airways Ltd shares remain in an uptrend, with the stock remaining a key barometer of the “re-opening” trade. In the short-term, price appears to be consolidating, as the stock oscillates around its 200-week moving average, with it also finding technical support between $5.20-5.30 going into this half’s results. Currently, there is a resistance zone that marks the share’s post-pandemic highs around $5.80 to $5.90 On the downside, there’s a confluence of support at around $4.80.