The WAM Global (ASX: WGB) investment team has been closely monitoring U.S. earnings season which commenced on 1 April. So far, 441 companies within the S&P 500 have reported results, with several key announcements still to come over the next two weeks, including Nvidia (NASDAQ: NVDA) on 29 May.
As fund managers, we consider a range of factors when evaluating company results, including how the result compares to market expectations, and whether the company has reduced, maintained, or upgraded its guidance for the remainder of the year. This reporting season, the companies we monitor have delivered strong results that have generally exceeded expectations at a pace consistent with historical norms, however management teams have not generally increased guidance at the same rate due to the uncertainty in the current economic environment.
We also incorporate qualitative factors when assessing how management teams are navigating the current dynamic environment, specifically whether they are taking appropriate steps to position their businesses for long-term success and how they are setting expectations for the remainder of the year. Consistent with our investment process which is centred on identifying and investing in high-quality, well-managed companies, we favour management teams that under-promise and overdeliver.
Pleasingly, many of the companies within the investment portfolio exceeded expectations at the result and maintained guidance, leaving them well positioned to deliver upside surprises throughout the year. Some of these companies include Safran (EPA: SAF), TransUnion (NYSE: TRU), RB Global (NYSE: RBA) and SAP (ETR: SAP).
Meeting with and listening to companies, competitors, suppliers, and industry experts is a core part of the WAM Global investment process. This week, the investment team attended two conferences in New York and Boston, focused on small to mid-cap growth companies and the consumer sector, with more scheduled over the coming weeks. Overall, we observed that corporate America continues to demonstrate resilience despite negative sentiment around tariffs and the broader economic outlook. Many companies expressed relief at progress in U.S.-China trade negotiations and welcomed the prospect of greater policy certainty to support decision making. The current backdrop has been favourable for idea generation and active management more broadly, with the team maintaining discipline and reallocating capital towards undervalued opportunities.
We remain confident in the long-term growth prospects for the companies we own in the investment portfolio and their ability to provide solid returns and a steady stream of dividends for shareholders going forward.
