We are into yet another quarterly result season.
What has been bothering me off-late is How much to look into these Quarterly Numbers?
One one side, I think- Being long term investors, it shouldn’t bother me too much. A one or two quarter hiccups shouldn’t worry someone who is bullish on long term performance of the business.
But on the other side, I think- Quarterly numbers are an indicator of where the company is heading. So, they shouldn’t be ignored.
And finally there is another thought. Assuming I am bullish on the long term prospects, but this quarter is not up to the mark. So, it would be financially better to sell the stock ASAP & come back to it after good numbers.
And similarly, a stock should be bought after good quarterly numbers.
If a stock is selling at 15-20 PE & it shows a PAT/ Sales de-growth YoY, then in next 3 months it can come down to 10-15 PE. No?
And if a stock is selling at 3-5 PE & it shows a PAT/Sales growth, then it can improve PE to 3-5. No?
For example- Immediately after great Q4 results, Avanti Feeds was available at 130 Rs. & before next result it was selling at 180/-. So, someone could have fetched about 40% return in one quarter without any result. May be if someone buysPI Ind today at 190/-, he/she can get decent returns before Q3 results.
On the other hand, for stocks like V-guard, Somany EPS has fallen this quarter.
So, wouldn’t it be less risky to just sell them now (irrespective of my long term views on the business) & come back after good quarter or just before the good quarter (if I can estimate that)?
P.S- Wish my portfolio only had stocks which keep growing every quarter like Mayur Uni has done for past 2-3 yrs.
Request others to share their thoughts on this.