Cac 40: Which CAC 40 groups have best passed the 2023 annual results test?

(BFM Bourse) – While the annual results season ended this week, BFM Bourse takes stock. We chose as a barometer the reaction of the stock price during the session following the announcement of these results.

The ball of annual results ended on Thursday, with the publication of the accounts of the media group Vivendi. In terms of profits, the harvest was good and even higher than last year.

However, net income is clearly not the indicator that most influences the market. So, which residents

of the CAC 40 have best succeeded in this test of annual results? To try to provide some answer, we have retained the stock market reaction of their shares on the day of the publication of their results (see infographics below), or the next day for companies which communicated their performances after the close of the market, such as LVMH or Michelin.

However, we made two small exceptions for Vinci and Publicis. Quite simply because these two groups had pre-announced their results by providing indications on important parameters (cash for Vinci, growth for Publicis). For these two stocks, we retained the stock market reaction following these pre-announcements.

LVMH at the top

On this basis, LVMH beat everyone, gaining 12.8% at the end of January after delivering its annual results. A reaction of pride on the part of the number one in luxury which had suffered at the end of 2023 to the point of underperforming the CAC 40 last year. But the group exceeded expectations in the fourth quarter, with growth of 10% on a comparable basis and acceleration in North America. “These results are robust and demonstrate LVMH’s defense capacity on revenues and margins in our opinion,” judged Royal Bank of Canada.

The “silver medal” goes to Thales (+9.07%), which generated cash flow significantly above expectations and recorded solid orders at the end of the year. “It seems that many Anglo-Saxon investors had positioned themselves downwards to anticipate a failure in the results, in an exaggerated manner. This did not happen,” slipped a financial intermediary. Hence the strong reaction to the title.

A flagship value for individual investors, Air Liquide takes third place (+8.26%), thanks in particular to robust growth at the end of the year. The group also doubled its margin objective by 2025.

On the downside, Teleperformance suffered by far the biggest decline (-23.13%), weighed down by once again disappointing revenues and margin targets for 2024 below expectations. The outsourced customer relations group must fight to convince the market that it is not the big loser from the emergence of generative artificial intelligence, affirming on the contrary that this trend will constitute a source of new revenue for it.

Dassault Systèmes suffered (-10.4% after the publication of its results) due to lower-than-expected sales of new licenses and disappointing growth in life sciences. BNP Paribas (-9.2%) and L’Oréal (-7.6%) also clearly disappointed the market.

A good record

Obviously, our approach based on stock reaction has its limits, like any indicator. The company’s share price performance may well be affected by market conditions and sentiment on the day. As an example, Hermès has once again delivered an excellent copy. But its 4.8% increase could have been higher, in a bull market. However, on the day of publication of its results, the CAC 40 was in poor shape (-0.24%).

It is to correct this effect linked to market conditions that we have both published an infographic with the raw reaction of the stock and a second (below) in which we calculated the outperformance or underperformance of the stock by compared to the evolution of the CAC 40 on the same day (clearly if a share gained 4% over one session and the CAC 40 gained 1%, its outperformance is 3%).

Ultimately, unlike other times when we carried out the same exercise, the ranking is only marginally modified. The top six remains unchanged, and Hermès climbs to eighth place from twelfth in the previous ranking.

Furthermore, the results are generally good. Certainly, only a little more than half (19) of the CAC 40 companies saw their stock price increase following the results. But the progressions were very marked: seven groups saw their shares gain more than 5%, 14 more than 3%.

These good company publications served as a catalyst for the market, allowing the CAC 40 to repeatedly push back its records during the session and at the close in recent weeks.

By sector, we notice that luxury has awakened since Kering has progressed well (4.9%) as have Hermès and LVMH. The automobile groups too, Stellantis (5.8%) and Renault (+6.5%) having delighted investors on February 15, during the session which followed the publication of their results. Both manufacturers have arguments to protect their margins and revenues at a time when electric vehicles have fallen out of favor with the market.

Conversely, it is a season to forget for banks. In addition to BNP Paribas, Crédit Agricole SA suffered (-5.21%) while Société Générale limited the damage (-1%). Even though this sector remains poorly valued on the stock market, the market does not forgive the slightest failure. However, revenues disappointed at BNP Paribas and Crédit Agricole SA while Société Générale showed a certain caution on the growth of its net banking income, the equivalent of turnover, for 2024.

Latest lesson: cash remains the indicator most watched by the market, several groups having seen their prices react very clearly to the generation of free cash flow (Michelin, Renault, Carrefour, Vinci or even, in a negative way, Eurofins) .