The American market, as we saw in the previous post, has been delivering impressive numbers , especially in stocks linked to information technology , causing the S&P 500 to be on the rise. 

How is the quarterly earnings season going in Brazil?

In Brazil, according to B3, as of February 27, 2024, 244 companies have already released their results for the fourth quarter of 2023. This represents around 60% of companies listed on the stock exchange . Of the 244 companies that have already released their results, approximately half of them reported higher profits than analysts expected.

Both positive and negative highlights of the results reported so far.

Some factors that may have contributed to the good performance of companies in the fourth quarter of 2023:

• Increased demand: The Brazilian economy showed growth in the fourth quarter, which boosted sales for companies that have local businesses.
• Cost reduction: Reduction in inflation has positively affected many businesses.
• Gross margin improvement: Some companies have managed to increase their gross margins, which means they are selling their products for a higher price than the cost of production.

 

The factors that contributed to companies' losses in the 4th quarter of 2023 are diverse and vary according to the sector and company in question. However, we can highlight some macroeconomic and specific factors that negatively impacted the results:

Macroeconomic Factors:

• High interest: The Selic rate , the basic interest rate for the Brazilian economy , closed the year 2023 above double digits, making credit more expensive and reducing consumption.

Specific Factors:

• Increased competition: The entry of new players into the market, especially in sectors such as retail and e-commerce, intensified competition and put pressure on prices.
• Investments in new technologies: Investments in new technologies, such as artificial intelligence and automation, may have impacted results in the short term .

 

Which companies have stood out so far?

In the mixed scenario of results for the 4th quarter of 2023, WEG (WEGE3) stands out positively, exceeding market expectations with the strong growth of its sales in the electrification area, highlighting its leadership position in this expanding segment.

Image 1: quarterly results and their estimates.

In the negative highlights we have Vale do Rio Doce (VALE3) which presented a disappointing performance, falling well below analysts' projections. The company faces the challenge of finding alternatives to the low consumption of iron ore in China , its main market, seeking to diversify its customers and products to mitigate negative impacts.

Do you want dividends?

This season, dividend hunters have reason to celebrate, especially investors from Banco do Brasil, BB Seguridade , Weg and even Vale do Rio Doce.

The highlight in the area of ​​income once again goes to Vale, which despite falling short of expectations, is still in a position to pay more than 11.7 billion reais in dividends, a measure that could maintain investors ' spirits in this stock.

 

Comparing American results with Brazilian ones

Image 2: Correlation between Ibovespa and S&p500

We note that the results season in the United States is proving to be considerably more positive, while here in Brazil we begin with a more mixed assessment of the results presented. However, the strengthening of the American market is not necessarily unfavorable for Brazilian investors , as we know that the positive effects of the external scenario tend to boost many businesses here in Brazil.

 

 

Keywords:

#financial #market #investors #shareholdings #income #diversification #assets #portfolios #macroeconomic analysis #microeconomic analysis #profits #companies #investments #funds #capital #trading #stocks #investment #speculation #hedging #economic analysis #earnings #dividends #interest