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3 ASX shares to watch during earnings season

James Mickleboro

Earnings season is upon us and many of Australia’s leading companies are busy preparing their reports.

Ahead of earnings season I thought I would highlight three companies that I believe could release strong half year results.

They are as follows:

Afterpay Ltd (ASX: APT)

This payments company has been tipped to deliver another impressive half year result in February. According to a note out of Goldman Sachs, it has been looking through app download data and suspects that Afterpay could smash its estimates in the first half. In fact, Goldman believes customer additions and gross merchandise value (GMV) could exceed its estimates by around 10%. Based on its latest disclosure for trading to end of November and app download data for December, it suspects Afterpay’s customer base could have reached as much as 7.2 million globally at the end of December. This compares to its estimate of 6.6 million. In respect to GMV, the broker has suggested that it could be as high as ~A$4.8 billion for the half. Goldman has previously forecast GMV of $4.3 billion for the first half of FY 2020.

Altium Limited (ASX: ALU)

This design software company was originally aiming to hit revenue of US$200 million in FY 2020. Due to the growing popularity of its Altium Designer, I believe Altium could smash through this mark on a trailing 12-months basis in the first half. Especially given the meteoric rise of the Internet of Things market. This is expected to play a key role in the company achieving market dominance and the achievement of its 2025 targets. These targets are for 100,000 subscribers and US$500 million in revenue. Altium’s shares hit a record high last week, which appears to indicate that expectations are high.

REA Group Limited (ASX: REA)

Although this real estate listings company is expected to post a subdued first half result, I suspect management’s outlook for the second half and FY 2021 will be very positive. Especially given the recent rebound in house prices, its listing price increases, and new revenues streams. In respect to the former, Australian house prices rose by the most in almost a decade during the December quarter.

The post 3 ASX shares to watch during earnings season appeared first on Motley Fool Australia.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020