Australian companies have been missing their profit forecast targets more than usual this results season in Australia, according to Deutsche Bank.
With the reporting season almost over, only 43% of companies have beaten Deutsche Bank’s June half forecasts compared to a four-year average of 52%.
And there’s a general downward trend in earnings forecasts for the current financial year.
While these forecasts have only been lowered by about one percentage point, the 2015 financial year target started at a low 6%, the second lowest growth forecast of the past 20 years.
“Australia has underperformed global markets in August, after outperforming in most reporting seasons in recent years,” says Deutsche Bank strategist Tim Baker.
He says there are patches of good news with solid performance of resource companies.
Excluding the giant BHP, June half resource profits have come in 7% above expectations and the 2015 financial year forecast has been upgraded by 5%.
“Cost control and project completion has helped, and cash is coming back to shareholders,” says Baker.
The chart below shows how current earnings per share forecasts compared to previous years:
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