The reporting season has so far been a touch better than expected. Just over a third of companies had reported as this column was written. The number of positive profit surprises and the breadth of profit increases were slightly higher than usual.
Don’t get too excited: results quality often tails off in the last two weeks of the profit season and the resource sector is doing most of the heavy lifting in terms of earnings growth. But there is enough to suggest the Australian share market’s recent gains have been justified – and that the market is not as expensive as the bears claim.
I’m always more interested in the micro rather than macro details, that is, the small-cap companies that surprise the market with good results. I hesitate to say “outperformed market expectation” because so few broking firms cover many small-cap stocks these days, making consensus forecasts too rubbery to use.