The full-year reporting season kicks off this week and is all but certain to confirm a third consecutive year of flat-to-negative EPS growth for the ASX 200. 

Since the interim reporting season in February, downgrades have outpaced upgrades by a ratio of 1.6:1 across the ASX 200, pushing aggregate EPS forecasts firmly into negative territory for FY25. That said, as we recently highlighted, there is no shortage of compelling growth stories across the ASX 200 at the sector and stock level, which we expect to be showcased this reporting season. 

There continues to be a detachment between share prices, which have generally moved higher since April lows, and consensus earnings estimates, which have continued to drift lower in aggregate. This divergence has pushed market valuations higher. The ASX All Industrials Index (ex-resources) now trades at an all-time high forward PE multiple of 21.7x, and seven out of the eleven ASX 200 GICS sectors trade above their five-year averages – most notably IT and Financials (led by the banks). 

With valuations stretched across much of the market (notwithstanding a few exceptions), there is little room for error this reporting season, and earnings delivery will be critical. As shown in Figure 3, the market has punished earnings downgrades and rewarded upgrades over the last six months. We expect this dynamic to continue as full year results are released throughout August.

Following our top-down view of the ASX earnings outlook earlier this week (read here), this report provides a reporting season calendar, summarises our stock-specific views across the Focus Portfolio, and offers in-depth result previews for three top 20 ASX stocks – WiseTech, Woolworths, and CSL. 

WiseTech has had a heavily disrupted nine month period, due to scandals related to founder Richard White’s personal life alongside associated product launch delays, governance concerns and board changes. We are now looking for WTC’s FY25 result to demonstrate a return to 'business as usual' under the recently announced CEO Zubin Appoo and the newly refreshed board. 

In our view, an in-line result should be enough to refocus the market’s attention towards the company’s strong fundamentals and attractive medium/long-term growth story. We believe there is scope for WiseTech to surprise consensus to the upside at its FY25 result, particularly on margins.

Margin upside

In its 1H25 result, WTC demonstrated positive margin momentum, with its EBITDA margin expanding 5bps to 50%. The business also upgraded its FY25 margin guidance to the top end of its range (50-51%) despite downgrading its revenue guidance to the lower end of its 15-25% range. This demonstrates the positive progress WTC is making on its company-wide cost efficiency program, which has already exceeded its initial target of A$50m. 

In our view, WTC’s aggressive push to ‘amplify and extend’ its use of AI tools to improve worker productivity – which last week it confirmed via internal emails will result in some roles becoming redundant – could yield greater cost savings than the market currently anticipates. 

Other key items to watch:

• Product pipeline – after delays to the highly anticipated launch of Container Transport Optimisation (CTO) – the biggest driver of recent downgrades – the market will be looking for WTC to confirm the successful launch of the product in Australia in 2H25 and to reaffirm expectations for a wider global roll out over the medium-term. 
• Customer wins – after announcing two top 25 global freight forwarder customer wins (Nippon Express and LOGISTEED) in its 1H25 result, a continuation of the recent cadence of major customer wins/rollouts would be well received by the market. 

If WTC can deliver positive progress on margins, product rollouts, and customer wins – which we expect it to – the stock should perform well, as investor confidence should be restored in the quality of its platform and the strength of its long-term growth outlook. Given WTC trades on a premium forward PE of ~79x (in line with its five-year average), delivery against consensus will be crucial, particularly considering the stock’s historical volatility on results days, which suggests the release is likely to be met with a large share price reaction (see Figure 6).

WOW has faced a multitude of headwinds in recent years, including subdued consumer spending, persistent cost/margin pressures, multiple ACCC investigations into the supermarket sector, intense public and media scrutiny, industrial action, and the departure of former CEO Brad Banducci.

However, we expect its FY25 result to demonstrate early signs of stabilisation, with a renewed focus on cost discipline and capital efficiency under new CEO Amanda Bardwell, who is set to deliver her inaugural full-year result. This shift should lay the foundation for improving operating margins and a return to positive earnings growth in FY26.

There are three key areas we are focused on for WOW this reporting season:

1. Market share recovery 

Following a period of market share losses to Coles (alongside subdued top-line industry growth amidst cost of living pressure), we are looking for confirmation of improved sales momentum through Q4. In 3Q25, WOW's Australian Food like-for-like (LFL) sales growth of +3% was broadly in line with Coles, supported by a strategic price reset to improve affordability and its successful ‘Cubeez’ collectibles program which helped drive traffic. Sustained or accelerating sales growth, in line with or ahead of Coles, would reinforce the view that WOW’s in-store execution and brand health is improving and that market share losses have been stemmed.

2. Profitability and cost focus 

Bardwell has entered the role of CEO with a renewed focus on profitability. WOW has announced a target of A$400m in annualised cost savings by end-2025. Beyond this, we see further cost rationalisation potential, noting WOW's store-level headcount is roughly double that of Coles, despite generating only 60% more in turnover, which points to an inflated cost base.

Key areas of potential include:

• Support office simplification
• Store productivity enhancements 
• Supply chain automation/modernisation (e.g. Moorebank DC, Auburn CFC ramp-up)
• SKU and supplier rationalisation
• Better use of automation and digital analytics in inventory management

The announcement of further cost-out initiatives would be well supported by investors. Improved margin disclosure by business segment (e.g., online vs. store, food vs. non-food) would also be welcome, helping investors better assess progress.

3. Portfolio review 

WOW has announced a strategic review of its underperforming and non-core segments, including Big W, NZ Food, and various digital ventures. The closure of loss-making MyDeal was a first step. However, we are looking for clearer signals of divestment or restructuring plans across the broader portfolio.

We would view the sale or spin-off of Big W and NZ Food positively, as this would be accretive to group returns on capital (ROFE) and simplify the business. A capital recycling strategy of divesting underperforming assets and reinvesting in higher-ROFE core segments would be well received by the market. 

FY26 earnings recovery in focus

Overall, we are looking for Woolworths to show that operating conditions are stabilising and that management is actively laying the groundwork for improved margins over the medium term. This will be key to supporting investor confidence in the expected earnings inflection reflected in consensus estimates from FY26 onwards (see Figure 8). With WOW trading on a forward PE of ~22x – towards the lower end of its historical range – the stock offers attractive value considering consensus expectations of a mid-teens EPS CAGR over the medium term (providing consensus remains well supported).

After a period of underwhelming operational and share price performance, CSL’s FY25 result offers a critical opportunity to re-establish confidence in the company’s earnings trajectory. 

While a lot of attention has been given to the challenges and risks facing Vifor (i.e. generic competition in iron infusions) and Seqirus (i.e. falling US vaccination rates), the key to CSL’s earnings story remains the recovery of Behring’s gross margins to pre-Covid levels (~58%).

Central to this recovery is the rollout of the Rika plasma collection system. Rika’s personalised process, shorter collection times (down to 35 minutes), and improved yields (+10% plasma volumes) are expected to materially reduce Behring’s cost per litre and lift gross margins.

With Rika now fully deployed across the US (as of June 2025), we are looking for tangible evidence of its margin benefits in the FY25 result to support our investment thesis. Beyond Rika, margin expansion should also be supported by volume/scale processing efficiencies, the growth of high margin products including HEMGENIX and ANDEMBRY, and further mix shifts towards HIZENTRA.

Delivery will be key...

Consensus expects Behring’s gross margins to lift from 49.7% in FY24 to 50.9% in FY25 and 52.9% in FY26. If CSL can meet these expectations and begin to restore market confidence in its medium-term margin recovery and growth profile (with consensus factoring in a 15% EPS CAGR from FY25–28), the stock offers clear value at ~24x forward earnings.

That said, another earnings miss/downgrade would place greater pressure on CSL’s margin recovery narrative and cast doubt over the achievability of current consensus forecasts. While we remain constructive heading into the result, we are mindful that another underwhelming result may prompt a reassessment of our conviction in the business.