February Result Season 2025: The Wrap

Feature Stories | Mar 14 2025

By Rudi Filapek-Vandyck, Editor

It almost hurts to think January had shown so much promise and optimism about what might lay ahead for the new calendar year.

The circa 15 months old bull market for equities, predominantly carried by AI and other technology-related stocks, plus the banks (!), seemed poised to become more inclusive, this time also pulling in laggards and losers from the past two years on expectations of RBA rate cuts and a bottoming out for the local corporate earnings cycle.

Even if we exclude the rumblings and uncertainty from US import tariffs that has impacted global financial markets over February and March, there's simply no escaping the fact the local results season did not live up to expectations.

Companies that had been struggling to grow their business and margins over the years prior are still struggling and even with the bar set relatively low for the season, outperforming analysts' expectations proved too much a challenge for many.

Not making matters any easier, those sturdy, reliable Winners from the years prior that did manage to release solid operational performances mostly saw their share price weakening in the aftermath as investors' mind was set on finding new Winners rather than continuing with the proven, known momentum-leaders.

February thus quickly morphed into an unpleasant challenge for many. On UBS's numbers, the average intra-day share price volatility throughout the month surged to 7%.

This is practically unheard of, but probably shouldn't surprise in light of the savage punishments that befell result releases by companies including AMP Ltd ((AMP)), Bendigo & Adelaide Bank ((BEN)), Domino's Pizza ((DMP)), Integral Diagnostics ((IDX)), Mineral Resources ((MIN)), Redox ((RDX)), SiteMinder ((SDR)), and plenty of others.

Data gathered by Goldman Sachs sound even more dramatic with 20% of all reporting companies in February experiencing a share price move of 10% or more on results day. If that UBS number is unheard of, what term should we use for Goldman Sachs' assessment?

The results itself proved a little better than forecast, on balance, but it didn't stop earnings forecasts from declining with corporate Australia staring at its third year in succession of negative growth in earnings per share (average for the ASX200).

FNArena's Monitor takes a more wholesome approach, also taking into account broader metrics and forward-looking statements issued by companies, and on this approach the season proved a little better than August last year, with the emphasis on "a little".

Two very important factors need to be considered: firstly, August 2024 might have been the worst results season in the history of FNArena's Monitoring, going back to August 2013. Secondly, the bar had risen slightly ahead of the season, but was all in all still very low.

Contrary to what one might suspect, a low bar does not by default translate into an easier challenge for Australian companies because, of course, there are reasons as to why expectations are so low.

And that's exactly the conclusion from February results; corporate Australia needs all the help and assistance it can get, including from the federal government, the RBA, from China, and elsewhere.

Unfortunately, the Trump administration starting trade wars through import tariffs on just about everyone looks like the exact opposite of what the proverbial doctor might have ordered.

The key numbers for the February 2025 season look similar to those from twelve months ago, with 32% of all results beating expectations but with 33% falling short. In comparison, August last year saw 27% beating forecasts and 37% disappointing. February last year at least saw more 'beats' than 'misses'; 33% versus 28%.

Strictly taken, that makes February this year not as good as last year's.

The numbers remain similar when comparing 49 rating upgrades and 57 downgrades, with target prices in aggregate lifting by 3.72%, see the archive from the past 12 years on the website.

https://fnarena.com/index.php/past-corporate-results-analysis/

Small cap companies contributed heavily to the disappointments, so if we restrict our numbers to the ASX200 we see beats, meets and disappointments lining up as approximately one third each. This is exactly the outcome from twelve months ago.