February's biggest ASX losers: Reporting season disasters and a pullback for commodity prices
A closer look at the 30 worst performing stocks last month
Source: iStock
Mentioned
KEY POINTS
- Morgan Stanley says stocks were punished much harshly this reporting season
- Gold and lithium stocks headlined declines amid a pullback in commodity prices and elevated capex costs
- A closer look at reporting season disasters like Temple & Webster, Domino's Pizza and Dicker Data
February was a rollercoaster ride for the ASX 200 but only the falling part. From Friday 3 February onwards, the market gave back -4.1% or a little over half of January's outsized 6.2% rally.
Reporting season added further insult to injury, with Morgan Stanley observing that average one day reactions for misses were punished much harshly than in previous seasons. On the other hand, beats were rewarded in-line with prior periods (based on average half-year and full-year reporting season reactions from August 2016 to date).
The average earnings miss fell -3.9% compared to an average fall of -2.1%
The average earnings beat rose 2.2% compared to an average gain of 2.5%
The 10 worst performing stocks in February
Note: For companies with a market cap greater than $300 million
Ticker | Company | 1-month % chg | Sector |
|---|---|---|---|
TPW | Temple & Webster | -39.6 | Discretionary |
RED | Red 5 Limited | -38.1 | Gold |
DMP | Domino's Pizza | -34.0 | Discretionary |
GL1 | Global Lithium | -32.5 | Lithium |
SBM | St Barbara | -28.3 | Gold |
JRV | Jervois Global | -26.5 | Cobalt |
OBL | Omni Bridgeway | -25.0 | Financial Services |
CUV | Clinuvel Pharmaceuticals | -24.2 | Healthcare |
LKE | Lake Resources | -23.3 | Lithium |
DDR | Dicker Data | -23.1 | Technology |
Plus 20 honourable mentions
Ticker | Company | 1-month % chg | Sector |
|---|---|---|---|
ZIP | Zip Co | -22.9 | Technology |
SLR | Silver Lake | -22.7 | Gold |
AMP | AMP | -22.5 | Financial Services |
WGX | Westgold Resources | -21.8 | Gold |
AEF | Australian Ethical | -21.6 | Financial Services |
LFS | Latitude Group | -21.4 | Financial Services |
CXO | Core Lithium | -19.8 | Lithium |
DVP | Develop Global | -19.5 | Materials |
GWA | GWA Group | -19.1 | Industrials |
RMC | Resimac Group | -18.8 | Financial Services |
RRL | Regis Resources | -18.7 | Gold |
ADH | Adairs | -18.4 | Discretionary |
29M | 29Metals | -18.4 | Copper |
PDN | Paladin Energy | -18.2 | Uranium |
DYL | Deep Yellow | -18.1 | Uranium |
PWH | PWR Holdings | -17.8 | Industrials |
NCK | Nick Scali | -17.7 | Discretionary |
IVC | Invocare | -17.5 | Healthcare |
SGR | The Star Entertainment | -17.5 | Discretionary |
NST | Northern Star | -17.4 | Gold |
Gold pains: Falling spot prices and poor cash flow
Gold made up a fifth of the 30 worst performing names. This reflected a sharp decline in spot prices, falling 6.8% from a peak of US$1,960 an ounce on February 2nd to US$1,825 by month end.
From a financial perspective, many gold miners struggled to deliver positive cash flow in the first-half of FY23. A household name like Northern Star (ASX: NST) posted cash outflows of $78.4 million for the half due to a 16% increase in total capital expenditure. Consequently, the company's cash position fell -28.3% to $409.5 million.
Gold spot price (Source: TradingView)
Lithium selloff: Another sector falls to spot prices
Chinese lithium carbonate prices have tumbled -36.5% from November 2022 peaks of around 600,000 yuan a tonne to 382,500 yuan. Softening new energy vehicle sales didn't help either, with Chinese data for January down 6.3% year-on-year and and down 48.3% from the previous month.
Reporting season disasters
There were plenty of companies that nosedived on half-year results. Some of the more interesting names (and one day performances on results day) include:
Temple & Webster (-26.9%): Half-year FY23 revenue fell -12% to $207m and profits down -46.7% to $3.9m. The company noted sales from the first five weeks of 2H23 was down 7%. TPW shares have struggled to bounce after the selloff, down -4.1% since its half-year result on 14 February.
Domino's Pizza (-23.8%): Domino's tried to offer customers 'more for more' rather than passing price through. But it eventually caved in and this was not well-received by customers. Revenue in the first half fell -4.3% to $1.15bn but profits fell -28.3% to $64m. Across 16 major brokers, the average target price was cut 15% to $61.30. Like TPW, Domino's shares continued to drift lower, down another -8.1% by the end of February.
Dicker Data (-10.7%): Top-line growth in the first half was up 25% to $3.1bn but this failed to trickle down to the bottom line, with net profits down 0.7% to $73m. This was below analyst expectations of $76.7m. Like the two stocks above, Dicker Data shares continued to sell off post earnings, down another -12% by the end of the month.
