Key takeaways:

• Stocks that fell sharply on reporting day saw the biggest increase in trading volumes compared with CY22

• Buy-to-sell ratios increased most strongly across stocks that fell on reporting day, whereas stocks that performed well following their results saw less buying interest than usual

• Energy sector results saw heightened trading interest across the community

• Lower dividends were likely behind a fall in trades for iron ore stocks versus CY22

With reporting season now out of the way, we've crunched the numbers and identified four key trends that occurred across the community during February. 

Whether it be heightened trading activity in sold-off stocks, an inclination to buy the dip', or a shift in appetite towards certain sectors based on dividends, Selfwealth members certainly made decisive moves throughout ASX earnings season.

Here is the lowdown on what we witnessed.

Selfwealth Members Traded Sold-Off Names

One of the defining trends across earnings season was a share price slump for a number of high-profile names in the immediate aftermath of their results. In some cases, strong results did little to deter investors from selling the news, while others laid bare warning signs amid the uncertain economic environment.

Selfwealth members took a liking to these opportunities, heavily trading stocks that fell sharply on reporting day like AMP (ASX: AMP), JB Hi-Fi (ASX: JBH), Commonwealth Bank (ASX: CBA), Qantas (ASX: QAN), Whitehaven Coal (ASX: WHC), and Appen (ASX: APX).

Each of these stocks reported a triple-digit percentage increase in trading volume on reporting day compared with average trade numbers from daily trading sessions across CY22. 

At the top, there was a 600% plus increase in trades for AMP versus its CY22 average, which fell 13% on reporting day after unveiling a big drop in funds under management and concerns about net interest margin growth for its banking division. 

Commonwealth Bank and Qantas saw trade volumes increase almost 450% and 320% respectively on reporting day against daily average trades from last year, with both stocks tumbling around 6% following their results.

Furthermore, where big volume increases occurred, the following day almost always yielded significantly above average trading volume compared with the average CY22 session.

Contrarian Reaction to Reports 

Expanding on the above observation, where some of the worst performing stocks on reporting day also recorded the largest increase in trading volume, we can say that Selfwealth members were not shy about buying the dip. 

Where a large increase in volume occurred on the back of a large sell-off on reporting day, the buy-to-sell ratio for every name increased by double-digit percentage points compared with their respective average from CY22.

On reporting day, Commonwealth Bank and Qantas saw their buy-to-sell volumes shift by 34 percentage points towards buying activity, resulting in values of 89.8% and 82.5% respectively. That means at least eight out of every ten trades on that day were buy orders.

Meanwhile, Appen buy-to-sell volume increased 23.7 percentage points to 75%, AGL recorded a 22.1 percentage point increase to 72.4%, while Whitehaven Coal buy-to-sell ratio on reporting day was 21.3 percentage points higher than its CY22 average at 75.6%.

On the other hand, where there was a major increase in volume on reporting day that aligned with a positive share price performance, the trend saw a fall in the buy-to-sell ratio for these names versus CY22 averages.

For example, Wesfarmers (ASX: WES) and Telstra (ASX: TLS) saw their trading volumes increase between 55-100% on reporting day, in light of positive market reactions to their results. However, the buy-to-sell ratios for these stocks were 37.5 and 27 percentage points lower than their CY22 averages respectively.It was a similar story for stocks where volume went backwards on reporting day, like CSL (ASX: CSL), and Fortescue Metals (ASX: FMG), where a double-digit drop in volumes was accompanied by a double-digit percentage point drop in each stock buy-to-sell ratio for that day.

Bumper Profits Sparked Interest Across Energy Names 

Selfwealth members used reporting season to load up on energy stocks. For the most part, where there was an increase in volume on reporting day, sector representation was relatively broad-based. However, across energy stocks like Whitehaven Coal, Woodside Energy (ASX: WDS), Santos (ASX: STO) - and by extension, AGL also - there was heightened trading interest. 

Take Santos, for example. On reporting day, trade numbers were almost 150% higher than the average daily trade figure from CY22. This followed news the company achieved record production and revenue across its most recent reporting period, with net profit up more than 200%, and shareholders rewarded with a 79% increase in the company final dividend.

In the case of Woodside, trade numbers on reporting day were 134% higher than the CY22 daily average, and the buy-to-sell ratio was 28.2 percentage points higher. The company achieved record profit that beat market forecasts, with its final dividend up 37%.

Trade numbers in Whitehaven Coal on reporting day were 227% above last year daily average. Again, the company reported strong earnings and a big dividend hike as well.

These figures suggest Selfwealth members are upbeat about the outlook for oil, gas, and coal exporters on the back of a year where the energy sector was the best performing ASX segment. The fact that each of these companies hiked their dividend may play a part in driving community sentiment.

Dividend Cuts Led to Iron Ore Pullback

Adding further weight to the idea that dividend policies drove at least some of the trading action across reporting season, three of the market biggest dividend-payers cut their dividends and also saw a fall in trade numbers on reporting day.

While the likes of BHP (ASX: BHP), Rio Tinto (ASX: RIO), and Fortescue Metals Group consistently feature among both the most popular and the most actively traded stocks in the community, interest in these stocks fell in the immediate aftermath of their results.

Trades in BHP on reporting day were about 13.3% below the CY22 daily average, and the buy-to-sell ratio declined by 10.5 percentage points to 54.7%. Rio Tinto figures were also down, 20.3% and 15.4 percentage points respectively. And as we mentioned earlier, Fortescue Metals went backwards, with trades down one-third and the buy-to-sell ratio slumping 14.5 percentage points to just 41.2%.

Each of these companies reported a massive drop in profits due to the pull-back in iron ore prices across the reporting period. Naturally, these results were coming off a very high base to begin with, as iron ore miners enjoyed a boom period during the pandemic when the commodity surpassed US$200 per tonne.

In any case, with profits falling sharply, each of these businesses made the tough decision to slash dividends, albeit yields in this sector remain quite high compared with other areas of the market.