(BFM Bourse) – As the annual results season ends this week, BFM Bourse stocks take. We chose the stock price reaction during the session following the announcement of these results as a barometer.
The annual results round ended on Thursday with the publication of media group Vivendi’s accounts. In terms of profit, the crop was good and even more than last year.
However, net income is clearly not the indicator that most influences the market. Therefore, which residents
Which of the CAC 40 fared best in this test of annual results? To try to give some answer, we kept the stock market reaction of the shares of companies that reported their performance after the market closed, on the day of their results publication (see infographics below), such as LVMH or Michelin.
However, we made two small exceptions for Vinci and Publicis. Quite simply because these two groups pre-announced their results by giving signals on important parameters (cash for Vinci, growth for Publicis). For these two stocks, we retain the stock market reaction following these prior announcements.
LVMH at the top
On this basis, LVMH beat everyone, rising 12.8% in late January after giving its annual results. A proud reaction to the segment’s number one in luxury that suffered at the end of 2023 at the point of poor performance of the CAC 40 last year. But the group exceeded expectations in the fourth quarter, with growth of 10% on a comparable basis and acceleration in North America. “These results are strong and in our view demonstrate LVMH’s ability to defend on revenue and margins,” Royal Bank of Canada judge.
The “silver medal” goes to Thales (+9.07%), which generated significantly better cash flow than expected and recorded solid year-end orders. “It appears that many Anglo-Saxon investors had exaggeratedly positioned themselves to the downside in anticipation of a failure of results. This did not happen,” the financial intermediary gushed. Hence the strong reaction to the title.
A key value for individual investors, Air Liquide is in third place (+8.26%), thanks to particularly strong year-end growth. The group also doubled its margin target by 2025.
On the downside, TelePerformance suffered its biggest decline ever (-23.13%), once again falling short of disappointing revenue and lower-than-expected margin targets for 2024. An outsourced customer relations group must fight to convince the market that it is not a big loser from the emergence of generative artificial intelligence, on the contrary, confirming that this trend will create a source of new revenue for it.
Dassault Systèmes suffered (-10.4% after the release of its results) due to expected sales of new licenses and disappointing growth in life sciences. BNP Paribas (-9.2%) and L’Oreal (-7.6%) also clearly disappointed the market.
Good record
Obviously, our approach based on stock reaction has its limitations like any indicator. A company’s share price performance may well be affected by market conditions and sentiment on that day. For example, Hermès has once again delivered an excellent copy. But its 4.8% increase could be higher in a bull market. However, on the day of the publication of its results, the CAC 40 was in a weak position (-0.24%).
To correct this effect linked to market conditions we have published an infographic with the stock’s raw reaction and a second (below) in which we have calculated the stock’s outperformance or underperformance compared to the evolution of the CAC 40. same day (clearly if a stock rises 4% in one session and CAC 40 rises 1%, its outperformance is 3%).
Finally, unlike other times when we have conducted a similar exercise, the rankings have only been slightly altered. The top six remain unchanged, and Hermès moves up from twelfth in the previous rankings to eighth.
Moreover, the results are generally good. Certainly, a little more than half (19) of the CAC 40 companies saw their stock prices rise following the results. But the progress was very marked: seven groups saw their shares increase by more than 5%, 14 by more than 3%.
These good company releases served as a catalyst for the market, allowing the CAC 40 to repeatedly push back its record close during the session and in recent weeks.
Sector-wise, we note that luxury has woken up since Kering progressed well (4.9%), as did Hermes and LVMH. Automobile groups, Stellantis (5.8%) and Renault (+6.5%) also cheered investors during the session following the release of their results on February 15. Both manufacturers argue to protect their margins and revenues as electric vehicles fall out of favor in the market.
In contrast, it’s a season to forget for banks. Besides BNP Paribas, Crédit Agricole SA (-5.21%) suffered while Société Générale limited losses (-1%). The market does not forgive the slightest failure even though the sector remains undervalued in the stock market. However, earnings at BNP Paribas and Crédit Agricole SA disappointed while Societe Generale expressed particular caution on its net banking income, equivalent to turnover growth, for 2024.
Recent lesson: cash remains the most watched indicator by the market, many groups have seen their prices react very clearly to the generation of free cash flow (Michelin, Renault, Carrefour, Vinci or even, negatively, Eurofins).
Note: We have excluded from our infographics Alstom and Pernod Ricard, whose financial years span two calendar years, ending at the end of March and the end of June respectively.Julian Marion – ©2024 BFM Bourse
