Reporting season wrap-up
In this week’s video insight, I discuss the key takeaways from the latest earnings season and what they mean for investors. While many companies exceeded expectations, cautious guidance and trimmed ASX 200 forecasts suggest a slower recovery ahead. I also explore the growing role of artificial intelligence (AI) in earnings calls and whether it’s translating into real financial gains.
Transcript:
Hi, I’m Roger Montgomery and welcome to this week’s video insight.
Ok. With another earninsg season under our belts, let’s cut through the noise, sift through the numbers, the rhetoric, and the market’s knee-jerk reactions and bring you a distilled view of what’s moving the needle – or not.
The scorecard from February shows earnings beats outpacing misses by a sturdy 3:2 margin. Not a blowout, though and not as good as the numbers we were looking at earlier in the season, when beats/misses were four to two. The tempered vigor of this ratio hints at persistent headwinds, especially for smaller players. Australia’s reporting calendar tilts toward small-cap reveals in its waning weeks, and this time, there were a few stumbles. Firms that beat consensus net profit after tax (NPAT) forecasts pocketed a tidy two per cent share price bump on average, while laggards got hammered, shedding five per cent on average. With respect to dividend surprises, it was a humdrum 6:5 beat-to-miss split – neither dazzling nor dire.
Most sell-side analysts had pegged February as a potential turning point – with rate relief and a rosier 2025 outlook unshackling corporate optimism. Unfortunately that wasn’t the case. Executives nodded toward a macro low point in the rearview mirror but stopped short of popping champagne about the future – perhaps the uncertainty about global geopolitics in the hands of Trump and Vance (as displayed by the appalling set up and gaslighting and grifting of Ukrainian President Zelenysky in the White House has corporate CEO’s just as nervous as equity analysts). Their Guidance remained stubbornly static across the board, a telltale sign that boardrooms aren’t ready to bank on upticks turning into a full-blown rebound. Right now it seems investors prefer to wait for proof of durability rather than bet on an early promise.
Post-results, the analyst brigade sharpened their pencils and lopped about one per cent off ASX 200 earnings per share (EPS) projections for FY25 and FY26. That nudges year-on-year growth to a sluggish -0.7 per cent for FY25, before it revs up to a punchier + eight per cent in FY26. The cuts weren’t democratic – hulking names in energy, banking, health care, and tech absorbed the lion’s share of the pain, their softer-than-hoped earnings dragging the index down. But remove these and the picture is actually much brighter.
Perhaps most memorable are the share price reactions. If your portfolio felt like it was riding a bucking bronco, that’s because it was. According to some analysts, result-day price gyrations hit a jaw-dropping 7 per cent average intraday swing – a record spike in twitchiness. That number by the way has been rising every year for the last three. Some suggest it’s caused by a cocktail of passive funds, evaporating liquidity, and many analysts suggested quite a few stale forecasts.
Finally, the subject of AI. AI chatter flooded broker calls like a tidal wave. Flight Centre (ASX:FLT) unveiled an AI trip planner for half its clientele, CAR Group (ASX:CAR) jazzed up Encar Home with AI support, and The Commonwealth Bank of Austraila (ASX:CBA) leaned harder into AI for customer delight. DATA#3 boasted AI in “nearly all” its offerings, Megaport teased a souped-up chat tool, and dozens more joined the chorus. The zeal is infectious—yet it’s fair to say the cash register’s quiet. AI’s footprint skews toward graspable wins like smoother service, not game-changing revenue streams. Serious investors might want to keep their powder dry until the hype hardens into dollars.
February’s results season painted a mottled picture. Earnings tilted positive, but corporate timidity capped the upside. Analyst tweaks signal a bumpy FY25, while wild volatility is likely to continue after reporting season as investors focus on global frictions.
Well, that’s all I have time for this week, please continue to follow us on Facebook and X.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
