So, while much of the research from broking houses focuses on which companies beat, met or missed expectations, a more useful measure is which firms improved their financial positions.
Overall, befitting a tough economic climate, the earnings season numbers were relatively mixed.
According to data from online broker CommSec, more than nine in 10 companies in the ASX 200 reported a profit, which is up slightly on the historical average. However, just over half of those companies were able to lift profits, compared to last year.
That’s not a terrible number but is representative of a sluggish economic environment, with many consumers and businesses unwilling – or unable – to spend.
Retail is a helpful example. Traditional department stores (Myer and David Jones) and discount stores (Big W, Target and Kmart) continue to do it tough in the hunt for sales growth.
However, look across the other side of the shopping centre and there were strong results from many others, including Harvey Norman, JB HiFi, Super Retail and Kathmandu.
A trial driver – and something to watch – is the continued strength of those retailers’ online sales, as well as the continued success of online-only players like Kogan.com.
However, as is always the case, share price movements are more driven by expectations.
We saw the likes of Nine Entertainment (owner of this masthead), Flight Centre and Isentia, among others, jump on better-than-expected results, while companies such as Webjet, despite delivering stellar growth, lost ground due to investors’ overly optimistic forecasts.
The last big trend worth noting is that investors are continuing to pay up big for growth.
The WAAAX technology darlings – Wisetech, Altium, Appen, Afterpay and Xero – are going from strength to strength. Some of that is as a result of very good results, and some is down to even more bullish expectations of ongoing success.
Either way, tread carefully; there’s less room for results error in future.
Scott Phillips is the Motley Fool’s chief investment officer.