The pre-season to the February reporting of corporate profits in Australia has opened up a glaring gap between forecasts for shareholder profits (falling) and stockbroking analysts' valuations for ASX-listed companies (rising).
Remarkable is that one of the sectors that is carrying a big chunk of investor hopes for the calendar year ahead -mining and energy- is prominently represented among the companies receiving downgrades to estimated earnings. Profit warnings from the likes of Downer EDI, Suncorp and Super Retail further add to the continuous downtrend in earnings forecasts.
On the sunny side, small cap miners and energy producers are equally represented among companies receiving upgrades to forecasts. All this probably goes to show, individual stories more so than broad sector dynamics are dominating previews for the February reporting season.