What Worked Australia - 13 May 2016 - Profitability and Earnings Revisions a focus

What Worked – While the last couple of weeks have seen long term momentum running at the expense of value, this week saw a move into earnings revision momentum, coupled with forward profitability. Minerals Resources Ltd (MIN, +8.4%), Regis Resources (RRL, +4.6%) and Aristocrat Leisure (ALL, +21.8%) have all seen strong forward earnings revisions over the last 3 months, and saw the rewards this week. On the other side, Oil Search Ltd (OSH, -0.8%),  SIMS Metal (SGM, -12.1%) and Alumina (AWC, -4.6%) all finished weaker on very poor revisions numbers.

Earnings based value metrics also posted good numbers for the week, and strangely enough, so did forward Sales Growth. Genworth Mortgage (GMA, +4.1%), Flexigroup Ltd (FXL, +2.7%) and Downer EDI (DOW, +5.4%) all moving in the right direction, and amongst some of the cheapest names on the street in 12 Month Forward PER terms.

Who Moved – Volumes looked a little better this week, with 13 names moving on substantially higher than normal volumes. On the positive side, Fairfax Media (FXJ, +14.4%), Incitec Pivot (IPL, +15.2%) and Myer Holdings (MYR, +12.8%) all finished the week up on strong volume, while Orica Limited (ORI, -14.5%), SKY Television (SKT, -13.3%) and Westpac (WBC, -3.5%) all down on heavy volume.  


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