As reporting season 2023 kicks off, here are 5 companies to keep an eager eye on!

Reporting season 2023 will kick off today with Rio Tinto (ASX:RIO) releasing its FY23 results. Companies have to release financial results within 2 months after the end of the financial year and this deadline is the end of August for stocks that use a July-June financial year. Companies using the calendar year must release half-yearly results, following the end of August deadline.

It’ll be a busy time so it can be hard to see top performing companies. Some you should look forward to because you own the stock. But others you should look out for even if you aren’t an investor because they provide insights into the broader economy and how your own company may perform.

We think there are a few companies that are worth looking out for, and we identify 5 in this article.

 

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5 stocks to watch during Reporting Season 2023

 

1. Credit Corp (ASX:CCP) – August 1

Credit Corp is one of those companies that major financial institutions sell bad debts to because they’ve just given up. Credit Corp makes money by recovering the debt but doing so in a way that is both profitable for them but also possible to actually recover the debt.

With the cost of living crisis impacting so many people, it’ll be interesting to see the growth in the company’s ‘loan book’ which was over $300m as of 1HY23. Granted, the company’s statutory results might not be as spectacular. Consensus estimates call for 14% revenue growth but for a 4% EBITDA decline and a 10% EPS decline.

 

2. Mirvac (ASX:MGR) – August 16

It is set to be a tough reporting season for property stocks due to interest rate hikes and construction supply chain issues. Mirvac may be an exemption at the top line, but not at the bottom line. Consensus estimates call for 12% revenue growth but for a 10% decline in EBITDA.

We are intrigued about this company because Mirvac is one of the few companies exposed to the Build to Rent (BTR) sector – which we think could be the greatest innovation to the apartment space since the creation of strata.

This reporting season, Mirvac will inevitably provide an update on the last 12 months’ endeavours in this space and perhaps accelerate its ambitions for the future. Only a few weeks ago, it established a new $1.8bn venture for BTR and we may get some early hints as to how the money will be deployed.

 

3. ASX (ASX:ASX) – August 17

The ASX is a listed company in its own right and is subject to the same reporting rules as any other. We expect this reporting season to be tough given that the listings pipeline has been more drier than the year before.

Consensus estimates expect revenues to be flat but for an 8% decline in EBITDA. Nonetheless, the outlook appears rosier given the IPO market has finally shown some signs of life for the first time since Russia invaded Ukraine. So if it goes down, it might be time to ‘buy the dip’.

 

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4. Megaport (ASX:MP1) – August 22

For us, we won’t be as interested in the share price change as we are about what the change in short interest will be. In mid-April, it was the most shorted stock on the ASX with 10.3% of shares on issue shorted. But the company achieved a $40m cash turnaround and is now outside the top 20 shorted on the ASX at only 3%.

Consensus estimates expect $153.4m in revenue (up nearly 40%) and for EBITDA to turn around from -$10.2m to $19.45m. Although the NPAT line is still expected to be negative, the loss is expected to shrink by roughly two thirds. So, this might be a better reporting season for this company than even some that are profitable.

 

5. Dominos (ASX:DMP) – August 23

This reporting season will probably be a shocker. If 1HY23 results and consensus estimates are any guide, revenue should be flat, but bottom line earnings will fall – by 23%. The company’s margins are being decimated from higher costs and inability to pass these onto consumers without sacrificing demand.

After a near unblemished record of growth, this company is now facing a period of stagnation and has recognised this by scaling back its plans for expansion. Things could well get worse before they get better.

 

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