Earnings Digest | Aristocrat Update

16 April 2019

 

​​​Global markets ​were mixed overnight as​ Wall Street edged lower, weighed down by financials as lacklustre bank earnings put a damper on investor enthusiasm.
 
​In contrast to Friday's strong profit announcement by JP Morgan, Goldman Sachs and Citigroup both reported revenue below market consensus estimates overnight. The banks have kicked off US corporate earnings season and it is far too early to draw conclusions. Major stocks set to report this week include  Netflix, BlackRock, Morgan Stanley and IBM. 

​As we touched on yesterday, during quarterly earnings season the focus of investors usually shifts away from broader macroeconomic issues and back towards company profitability. The current earnings season is highly anticipated by markets, given expectations are for a fall in earnings generally​.
 

Stock in Focus: Aristocrat Leisure (ALL:ASX)

​Aristocrat shares have made a recovery in 2019, after being hit hard by last year’s market volatility with investors questioning Aristocrat’s “expensive” valuation and future growth prospects.
 

At their recent AGM, Aristocrat re-iterated they are tracking in-line with their plan for continued growth for 2019, with help from its recent acquisitions to expand into the larger social gaming market – expected to have a total market share of about $50billion. 
Their existing land-based business will experience incremental gains with no major casino expansions expected in 2019 financial year. We welcome the recent ​share price ​recovery and believe nothing has changed fundamentally for Aristocrat’s business​.​
 
We currently have a BUY recommendation on Aristocrat.

 
Australia & New Zealand Market Movers

​​​The Australian share market was flat on Monday (ASX 200 index +0.00%) with the benchmark ASX unable to join in with a pan-Asia rally as gold miners weighed and several fund managers lost ground. As the market mood improved, safe-haven gold futures struggled and Australia’s gold mining sector declined, with mining majors Newcrest Mining and Evolution Mining experiencing losses.

The New Zealand market started the week off on a higher note (NZX 50 index +0.80%) following gains on Wall Street. Local growth stocks had a strong session as A2 Milk led gain​s. Queenstown Airport, of which Auckland Airport owns a quarter, projected a 13 percent increase in winter capacity due to extra flights from Qantas and Jetstar.
 

3 Things Markets Will be Watching this Week

  1. ​The​ US first-quarter reporting season​ gets into full swing this week​.
  2. Minutes from the last RBA meeting are released on Tuesday.
  3. ​Aussie employment figures are published Thursday, while NZ inflation data is released on Wednesday.

 

Have a Great Day,
 

Team

​In contrast to Friday's strong profit announcement by JP Morgan, Goldman Sachs and Citigroup both reported revenue below market consensus estimates overnight.

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