Despite the challenges, earnings expectations for FY22E remained intact through August, standing at 20% according to Refinitiv. In this regard, the earnings outlook has survived Delta’s force and results season has left us comfortable that the earnings recovery pathway we have outlined through the course of the past 12 months remains intact. Here we detail three key themes categorising company results:
1. Looking through the valley
Companies in this category are substantially impacted by the current operating environment. In many cases, investors are prepared to look through the next 3-6 months and into better times ahead.
2. Peak or plateau - The winners from lockdown
This debate is set to continue as to whether the winners from the lockdown can maintain elevated activity levels when economies reopen. Can share prices and multiplies survive this test?
3. It is structural - growth across all seasons
The third group of companies continued to walk in rare air. These companies continued to post strong growth despite the difficult operating environment.
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John is a leading investment strategist with 20 years experience.