Small caps hidden earnings surprise

Investment bank CIMB Securities has found several small cap disappointers in the coming earnings season based on in depth research.

Looking for a new way to traverse the August reporting season minefield?

CIMB has come up with a “hotspots” map outlining a list of small caps that could surprise on both the upside and downside next month.

Their analysts looked at a stock's three-year track record that are over- or under-delivering on results compared with consensus forecasts, the trend in recent broker earnings changes, the magnitude of the earnings revisions and the earnings risk in terms of how far apart analyst estimates are (the more dispersed the estimates, the bigger the risk).

Based on the four metrics and CIMB’s own analysis of the stocks, the broker highlighted Arrium (ARI), QUBE (QUB), Sirtex Medical (SRX), Transfield Services (TSE) and Virgin Australia (VAH) as possible small cap disappointers.

On the flip side, Fletcher Building (FBU), Mermaid Marine (MRM) and Perpetual (PPT) are expected to deliver ahead of expectations.

Mermaid Marine and Sirtex Medical are part of the Uncapped 100.

Click here to read about earnings expectations for the Uncapped 100.

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