Given the market’s hypersensitive response to many of the stocks that posted pretty ordinary results during August’s reporting season, investors could be forgiven for asking: What exactly were you smoking? When it comes to the big end of town – aka the ASX 300 stocks – it’s institutional investors who move the market, and last reporting season they moved it plenty – both up and down – with some stock’s results receiving all the pathos of a Greek tragedy.
One of the biggest overhangs from last reporting season was the wildly gyrating share price volatility stock’s received in response to their results, with the market appearing to over-react to stocks failing to beat consensus forecasts, mixed outlooks or lower FY26 guidance.
Toppy valuations - poor results
Overall, it was stocks with toppy valuations and poor results that received the bulk of the market’s wrath.
Following a mixed result – including choppy earnings, plans to cut 3,000 jobs, and spin off its Seqirus operation – CSL (ASX: CSL) experienced its single biggest one-day share price drop on 19 August, which saw $22 billion wiped off its value.
Since 18 August CSL’s share price has fallen in a virtual straight line from $271.99 to $207.90 today.
But the annual report card for corporate Australia’s listed stocks included many examples of stock’s receiving similar treatment to that dished out to CSL.
Other stocks on which the market appeared willing to take a sell-now-and-ask-questions-later stance were James Hardie (ASX: JHX), AGL (ASX: AGL), Sonic Healthcare (ASX: SHL), Woolworths (ASX: WOW) and Amcor (ASX: AMC).
Big picture
What also became evident during Australia’s 2025 reporting season were hints of a shift in the domestic economy from mere resilience to green shoots signalling early-stage recovery.
The low-hanging fruit can be seen within consumer and housing sectors that are starting to respond positively to easier financial conditions, and this is evident in sales updates following 30 June.
However, an equal split of earnings beats and misses marks a notable slowdown from previous years.
While the consumer discretionary and health care sectors consistently outperformed expectations, the consumer staples and industrials sectors underperformed.
Meantime, while forward earnings revisions were revised somewhat downwards, companies with offshore exposures were dealt an ominous reality check due to U.S. housing troubles, along with lingering tariff uncertainties.
However, given the alacrity with which stocks generally re-rated positively post-results, it’s clear that a lot of institutional investors were caught ‘yinging’ when the marketing was actually ‘yanging’.
The biggest takeaway for investors is that following the coattails of institutional investors isn’t a strategy that always works.
Last reporting season, institutional investors behaved as if having the chutzpah to make brave calls was more important than making the right calls.
It's easier to be brave when you're dealing with someone else's money.
Heightened volatility remains
With the dust from reporting season now finally settling, the global equity bull market appears to be far from over.
While the S&P 500 closed above the 6,500 mark for the first time last Thursday, the S&P ASX200 nudged 9000 points late last month.
However, in the face of a few structural factors, like rising passive ownership, quantitative trading, the meddlesome interference of shorting on some stocks, and back-of-the-envelope broker estimates – that should have never received daylight - record-high share price volatility remains a present reality.
Telstra: A stock in the rear-view mirror
Despite being on a tear since trading at $4.03 early January to 4.91, Telstra (ASX: TLS) share price is trading around 2003 levels and is down 26% from its 2015 highs and 45% lower than its all-time highs in 1999.
While Telstra has long suffered the moniker of ‘low-growth plodder’, last reporting season it posted a standout FY25 with a 31% rise in statutory net profit, reaching $2.34 billion.
What the market clearly liked about the result was the absence of one-off items, strong mobile earnings and disciplined cost control.
Management also demonstrated faith in its future by extending its share buyback program by $1 billion, after completing $750 million earlier in the year.
Interestingly, the company has learned not to peddle rhetoric the market isn’t interested in.
Interestingly, previous 5G goals under the T25 strategy – while still intact - were replaced within the FY25 earnings updates, which were skewed heavily toward AI and digital infrastructure, without revisiting those earlier quantitative network targets.
What this signals to Roger Montgomery, founder and chairman of Montgomery Investment Management, is Telstra’s downgrading of public discussion around 5G traffic milestones and a shift in its focus toward profitability, cost discipline, and AI-driven transformation.
Meaningful Telstra FY25 numbers
Underlying Earnings rose roughly 5% to around $8.6 billion, in line with guidance.
Mobile segment remained the earnings backbone, with service revenue growing circa 3–3.5%, thanks notably to rising postpaid plan prices (up $3–5/month).
Operating expenses dropped between 5–6%, and the company achieved this through cost-reduction efforts, including headcount reductions – 3,208 roles cut, reducing the workforce to approximately 30,553.
While the FY24 figure had been burdened by a $715 million hit from restructuring and write-downs, one-off costs didn’t resurface in FY25, helping underpin the profit surge.
Dividends and capital returns
Telstra declared a final dividend of 9.5 cents per share, up from 9 cents – a 5.6% increase, aligning with enhanced shareholder returns.
Together with the $1 billion buyback, the higher dividend reflects confidence in cash flow and capital strength.
Strategy
Telstra will sell 75% of Versent, its cloud services unit, to Infosys for $233 million, including $175 million upfront, with earn-outs contingent on performance. The sale is expected to be completed by March 2026.
Enterprise performance clearly remains under pressure with customers shifting away from traditional voice services, and the $50 million impairment on its London Hosting Centre highlights some underlying legacy challenges still plaguing the business.
Job cuts also continue into FY26 with an additional 550 roles targeted, accounting for around 2% of the workforce, to help restructure the enterprise division.
To its credit, the company notes these losses are not attributed to AI.
Looking Forward
Telstra forecasts FY26 underlying earnings between $8.15 billion and $8.45 billion, compared to $8.02 billion in FY25.
While broadly positive, the guidance sits slightly below the consensus estimate of $8.44 billion, prompting some analyst caution.
Meanwhile, Telstra is also working towards its “Connected Future 30” strategy, aiming to lead into the 6G era with a self-optimising “Autonomous Network,” enhanced digital infrastructure capability, AI integration, and “network as a product” initiatives.
This strategy, adds Montgomery, underscores Telstra’s commitment to evolving beyond traditional telecommunication services toward infrastructure-driven digital leadership.
Telstra has a market cap of $55.8 billion; the share price is up 25% in one year.
The stock appears to be in a long-term uptrend, confirmed by multiple indicators.
Consensus is Moderate Buy.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
