From a company’s performance to economic trends, how do you know what to listen to?
Let’s use the recent news from companies listed on our sharemarket (the NZX) to explore some fundamental investment considerations. With earnings reports currently being released, some companies have posted impressive results, while others have fallen short. Some sectors have shown resilience, while others have faced challenges.
The largest listed company on the NZX is Fisher & Paykel Healthcare, a leading manufacturer of medical devices. It provided a positive trading update and raised its earnings guidance for the first half of the 2025 financial year. As a result, the share price rose over 9% on the day.
However, several professional analysts have the company’s stock rated as “underweight”, meaning they expect it to underperform the market in the short term. They argue the market may be overvaluing the company, with their view being investors could be too optimistic and potentially overpaying for the shares.
To provide further comparison in the healthcare sector we need to head to the Australian equity market (the ASX). Sonic Healthcare, a global provider of pathology and radiology services, has recently reported earnings results.
By contrast, the company reported a downgrade in earnings, partly due to lower testing volumes and profit margins. Many analysts have retained a “neutral” rating on this stock, reflecting the belief that while Sonic Healthcare remains a solid company, the upside potential is limited at current price levels.
What about the telecommunication sector?
Spark NZ, the country’s largest telecommunications company, reported results many considered disappointing, leading to a drop in its share price. The company is facing increased competition, regulatory pressures, and profit margin erosion.
Some analysts are rating the stock as “underperform”, meaning it’s expected to lag the market. Despite these challenges, the company highlighted some positive catalysts ahead, such as reducing its debt, and partnering with data centre operators to expand its infrastructure and services. These developments could boost its earnings and valuation in the future.
The broader telecommunications sector in both New Zealand and Australia is facing headwinds from competition, pricing pressures, and the need for significant investment in infrastructure, particularly in 5G and data centres. These factors could weigh on the profitability and performance of the sector, an environment to consider when thinking about your investment decisions.
Patience is key as an investor, it is wise to be cautious and look for companies that have a strong balance sheet, a loyal customer base, and a clear strategy to adapt to the changing market conditions.
Of course, investing is not just about individual companies and sectors. You also need to consider the bigger picture, such as the overall market and economic conditions (macroeconomics, or “the macro” as those in the industry like to refer).
A quick look at the world’s second largest economy: China
The Australian Treasurer has just announced an upcoming visit to China, the first in seven years. China is a major trading partner for both New Zealand and Australia, and its economic health and geopolitical relationships have significant impacts on many sectors of antipodean economies.
This visit could signal a thawing of the diplomatic tensions between the two countries, which have been strained for some time.
A positive outcome from this could boost confidence and demand for commodities and other Australian exports. Let’s not forget Australia is New Zealand’s second largest trading partner, behind China, so a strong Australian economy should be supportive of our economy.
The above only scratches the surface on what to consider as an investor. It serves as a reminder for some fundamentals. We do not advocate trying to pick the best time to invest in the market, it is time in the market that is most important, we instead are highlighting the need to be cautious, and patient, with company valuations.
Be selective and diversified - Don’t put all your eggs in one basket, and lastly, stay informed and adaptable.
With an ever-changing financial landscape, keeping up with what’s happening can be a complex and overwhelming task. By understanding how to decipher earnings reports and analysis, you start to gain valuable insights into the current environment, and better prepare yourself to navigate the investment markets as an individual investor.
Jarden Wealth Limited is an NZX advisory firm. A financial advice disclosure statement is available free of charge at jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement/.
Full disclaimer available at: jarden.co.nz/wealth-sales-and-research-disclaimer.
