GAAP accounting rules that allow companies some creative wriggle-room when presenting their numbers, doesn’t make it easy for you the investor or shareholder to draw as accurate a bead on how they truly performed over the past reporting season.
But as any broker will tell you, markets always look forwards, not backwards.
So while you’re looking in the rear-view mirror into what stocks did during August’s upcoming FY25 reporting season, remember it’s more important to stay focused on what happens next and not what happened in the past.
Last reporting season threw up some interesting anomalies that challenged the market's traditional response to a company’s earnings missing or beating consensus expectations.
Contrarian thinking influenced 1H reporting season
While stocks that beat earnings typically move around 5% higher on the day, that wasn’t always the case last reporting season.
Some stocks with reasonable results (but a ho-hum outlook) were overlooked by those making robust bets on the future - even if their results disappointed.
What happens this reporting season remains to be seen, but the current tariff overhang, two regional wars and a continued rate-cut cycle all make for a mercurial backdrop to the all-important outlook commentary.
While full-year results typically include audited financials, including revenue, profit, and cash flow metrics, they also include dividend declarations – assuming there is one - capital management updates, and hopefully some guidance on FY26 numbers.
Valuations overlay
Also adding an overlay to this August’s reporting season is the broad consensus that the ASX – despite what results have in store – looks overvalued and as such is prone to a higher risk of a correction through the seasonally weak months of August and September.
We’ve already seen signs of this with Commonwealth Bank (ASX:CBA) – the only big-four bank to report in August – which is expected to come under greater price pressure due to the continued unravelling from its lofty perch as the world’s most expensive bank.
But with Trump pivoting towards more market-friendly policies and the Reserve Bank (RBA), likely to cut rates further, shares are expected to provide reasonable gains into year-end.
Check your investor biases
Lessons from last reporting season should also remind investors to second-guess some worn-out investor axioms that may no longer stand up.
Firstly, there’s the hoary old chestnut about investors flocking to staples stocks like supermarkets during times of macro and market uncertainty.
Remember that investing due to market uncertainty and safe-haven assets like gold are trades based purely on fear.
While you might be fearful of investing in a certain stock after it’s reported its numbers, someone else might see it as a golden opportunity to enter a quality stock after it's been sold off.
Equally vexing for investors in the wake of reporting season is that brokers can look at the same numbers and draw diametrically different conclusions about a company’s future upside.
For example, while Bell Potter recently downgraded to Sell a growth stock like TechnologyOne (ASX: TNE) due to stretched valuations, others may see the company’s growth trajectory in the UK as a reason the re-rate the stock higher.
Similarly, while mounting headwinds throughout FY25 are expected to relegate retailers to flat to low single-digit earnings, some stocks within the sector repeatedly defy graving by outperforming their peers.
Brokers aren’t oracles
This a reminder to take all broker conclusions with a major pinch of salt, and drill beyond macro drivers to system factors influencing individual stocks.
For example, the broad consensus across the board this reporting season is for muted single-digit earnings growth in the face of myriad headwinds.
It’s bland broad-strokes like this that can easily lead you to wrongly conclude that it’s just not worth playing in the share market sand pit.
Nothing could be further from the truth.
Warren Buffett's summed it up nicely when he penned the immortal lines: “buy when everyone is selling and sell when everyone is buying.”
Here are some guidelines to help you make sense of August’s reporting season.
Look well beyond profit when judging results: FY25 earnings will be dissected not just for absolute growth but for how that growth was achieved.
Your job is to look beyond headline numbers to the quality of earnings and ask:
- Did top-line growth come from pricing power or volume recovery?
- Were margins protected through genuine productivity gains or short-term cost cuts?
- Are companies demonstrating scale efficiencies, or masking weakness with accounting levers?
As an investor, you want some assurance that earnings durability isn’t just a function of cost containment – but of successful strategic and/or tactical execution amid an admittedly more challenging environment.
FY26 guidance - reliability over false confidence: Remember, the results are a look at the past. Last year’s numbers generally shouldn’t surprise by much, because if they were going to, the company is required to ‘update’ the market during confessions season – the latter part of June, before books are closed for the full year.
As a result, the outlook statements accompanying these results should - everything being equal - carry way more gravitas in the eyes of investors.
The market has learnt to be sceptical of overly bullish forecasts, especially in a climate where household consumption is slowing, geopolitical risks are intensifying, monetary policy could be more accommodative and where Trump’s policies, and their impacts, are unpredictable.
So companies ballsy enough to give investors the straight dope - with a mix of pricing, volume, and margin drivers – are more likely to be rewarded with investor trust.
Capital management back in focus: With the cost of capital still elevated and economic visibility patchy, companies recognise the need to demonstrate disciplined capital allocation.
So that said, keep a lookout for sustainable dividend payout ratios, evidence of stable or improving return-on-invested-capital (ROIC), and sensible capex plans aligned to realistic growth trajectories.
Meanwhile, boards that preserve cash buffers while maintaining shareholder returns could be viewed more favourably than those aggressively pursuing growth at any cost.
The exceptions are those companies that demonstrates solid growth and articulates confidence and a clear plan for continued growth.
Retail & Consumer: Investors also want to see how companies have managed promotional activity, inventory levels, and margin protection.
High revenue with lower gross margins is generally not considered acceptable, so with consumers under pressure, signs of customer retention and digital engagement will be helpful.
Tread carefully…
Reporting calendar
Friday, August 8
Block, Inc. (XYZ) | Nick Scali (NCK) | Centuria Industrial REIT (CIP) | Qbe Insurance Group (QBE)
Monday, August 11
JB Hi-Fi (JBH) | Charter Hall Social Infrastructure REIT (CQE) | Car Group (CAR) | Dexus (DXS) | Iress (IRE)
Tuesday, August 12
Life360 Inc. (360) | SGH (SGH) | Seven West Media (SWM)
Wednesday, August 13
Arena REIT (ARF) | AGL Energy (AGL) | Amotiv (AOV) | Commonwealth Bank Of Australia (CBA) | Computershare (CPU) | Evolution Mining (EVN) | Insurance Australia Group (IAG) | Treasury Wine Estates (TWE)
Thursday, August 14
Suncorp Group (SUN) | ASX (ASX) | Homeco Daily Needs Reit (HDN) | Orora (ORA) | Origin Energy (ORG) | Temple & Webster Group Ltd (TPW) | Abacus Storage King (ASK) | Pro Medicus (PME) | Ventia Services Group (VNT) | Growthpoint Properties Australia (GOZ) | Telstra Group (TLS) | Articore Group (ATG)
Friday, August 15
Cochlear (COH) | Healthco Healthcare and Wellness REIT (HCW) | Mirvac (MGR)
Monday, August 18
Charter Hall Retail REIT (CQR) | The A2 Milk Company (A2M) | Contact Energy (CEN) | Aurizon Holdings (AZJ) | Bluescope Steel (BSL) | Digico Infrastructure REIT (DGT) | GPT Group (GPT) | GWA Group (GWA) | Lendlease Group (LLC) | Ampol (ALD) | oOh! Media (OHL)
Tuesday, August 19
Regis Group (RGN) | Centuria Capital Group (CNI) | CSL (CSL) | Mercury NZ (MCY) | Judo Capital Holdings (JDO) | BHP Group (BHP) | Challenger (CGF) | HMC Capital (HMC) | Hub24 (HUB) | Amplitude Energy (AEL) | Monadelphous Group (MND) | Reliance Worldwide Corporation (RWC) | Seek (SEK) | Sims (SGM) | Woodside Energy Group Ltd (WDS)
Wednesday, August 20
Corporate Travel Management (CTD) | Breville Group (BRG) | Cleanaway Waste Management (CWY) | Iluka Resources (ILU) | Fletcher Building (FBU) | James Hardie Industries (JHX) | Stockland (SGP) | Superloop (SLC) | Santos (STO) | The Lottery Corporation (TLC) | Magellan Financial Group (MFG) | Transurban Group (TCL) | Spark New Zealand (SPK) | APA Group (APA)
Thursday, August 21
Charter Hall Group (CHC) | Xero (ERO) | Fisher & Paykel Healthcare Corporation (FPH) | Universal Store Holdings (UNI) | Domain Holdings Australia (DHA) | Downer Edi (DOW) | Bega Cheese (BGA) | Northern Star Resources Ltd (NST) | Goodman Group (GMG) | IPH (IPH) | Auckland International Airport (AIA) | Brambles (BXB) | Healius (HLS) | Insignia Financial Ltd (IFL) | Megaport (MP1) | Netwealth Group (NWL) | Perpetual (PPT) | Qube Holdings (QUB) | Ridley Corporation (RIC) | Sonic Healthcare (SHL) | Cordan (CDA) | Skycity Entertainment Group (SKC) | Lifestyle Communities (LIC) | Super Retail Group (SUL) | Whitehaven Coal (WHC) | National Storage REIT (NSR)
Friday, August 22
Coast Entertainment Holdings (CEH) | Helia Group (HLI) | Guzman Y Gomez (GYG) | Latitude Group Holdings (LFS) | Cuscal (CCL) | Inghams Group (ING) | Accent Group (AX1) | Monash IVF Group (MVF) | Cobram Estate Olives (CBO) | GQG Partners (GQG) | Zip Co (ZIP)
Monday, August 25
Pilbara Minerals (PLS) | Dalrymple Bay Infrastructure (DBI) | Regal Partners (RPL) | Regis Healthcare (REG) | Abacus Group (ABG) | Aussie Broadband (ABB) | Ansell (ANN) | Bendigo And Adelaide Bank (BEN) | Vicinity Centres (VCX) | Fortescue (FMG) | NIB Holdings (NHF) | Nuix (NXL) | Chorus (CNU) | Reece (REH) | Endeavour Group (EDV) | Southern Cross Austereo (SXL)
Tuesday, August 26
AUB Group (AUB) | Scentre Group (SCG) | G8 Education (GEM) | Tyro Payments (TYR) | Kelsian Group (KLS) | Coles Group (COL)
Wednesday, August 27
Adairs (ADH) | Meridian Energy (MEZ) | Lovisa Holdings (LOV) | Wisetech Global (WTC) | Ebos Group (EBO) | Flight Centre Travel Group (FLT) | Worley (WOR) | Sigma Healthcare (SIG) | ARN Media (A1N) | Nine Entertainment Co. Holdings (NEC) | Domino’s Pizza Enterprises (DMP) | Tabcorp (TAH) | Woolworths Group (WOW)
Thursday, August 28
South32 (S32) | Mineral Resources (MIN) | IGO (IGO) | Sandfire Resources (SFR) | Wesfarmers (WES) | Bapcor (BAP) | Smartgroup Corporation (SIQ) | Atlas Arteria (ALX) | Cromwell Property Group (CMW) | IDP Education (IEL) | Medibank Private (MPL) | Qantas Airways (QAN) | Ramsay Health Care (RHC) | Dicker Data (DDR) | Macquarie Technology Group (MAQ) | The Star Entertainment Group (SGR) | Beacon Lighting Group (BLX) | TPG Telecom (TPG) | Air New Zealand (AIZ) | Web Travel Group (WEB)
Friday, August 29
Enero Group (EGG) | Coventry Group (CYG) | Aspen Group (APZ) | Steadfast Group (SDF) | Virgin Australia Holdings (VGN)
Tuesday, September 16
New Hope Corporation (NHC)
Thursday, September 25
Washington H Soul Pattinson & Company (SOL)
Tuesday, September 30
Liontown Resources (LTR) | Macquarie Group (MQG)
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
