The Toronto stock market has become a tough audience and companies are finding they better deliver nothing less than stellar performances if they want applause.
After giving a warm reception to several quarters of moderate earnings growth, the market is now looking for more, and is no longer content to reward the average.
"Any surprises is what we're moving on here. People who are just meeting their goals here are not getting rewarded. If you want your stock to move up, you really have to outperform significantly and give good guidance," Conor Bill, executive vice president at Mt. Auburn Capital in Toronto, said.
The results not only have to be good, they have to be seen to be good, with bonus marks given for transparency in earnings reports.
"People are looking at the guidance as well. And in the post-Enron world, people are really looking at the quality of the earnings a bit more as well, hitting your numbers and doing it by accounting magic, doesn't seem to be enough any more," Bill said.
Evidence that the market is no longer a pushover for a good-looking headline was seen over the past week when a number of companies, including big nickel miner Falconbridge Ltd, delivered outstanding second-quarter results, but got punished for failing to meet analysts' estimates.
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