ASX reporting season: Tuesday's hits and misses

Resources aren't the only cyclical stocks – Seek (ASX: SEK) shares briefly hovered around two-year lows as falling job ads and investment write-offs chipped away at its bottom-line and dividend payout.

Today's Reporters

What a Hefty Price Tag

Australian job ads are down around 16.7% year-to-date, according to the latest ANZ-Indeed survey. With that in mind, it wasn't surprising to see Seek report FY24 revenue and profit declines of 6% and 33% respectively.

But the company's FY25 guidance was the main kicker. Seek said it expects FY25 revenue to be flat year-on-year and adjusted profits to fall 12.6% (assuming the midpoint of the $130-180 million guidance) compared to market expectations of $215 million. This was a massive 27% miss.

What's interesting is that Seek is now trading at around 47x its FY25 guidance. Not that there's anything wrong with that kind of valuation – You just need the growth to back it up.

A miss of this magnitude typically results in a day of sustained selling. Surprisingly, Seek was well-supported after the initial morning gap down. The stock finished the session down 6.6%, from session lows -11.4%.

Seek intraday price chart on Tuesday, 13 August (Source: TradingView)

What will tomorrow bring | Seek will likely see an influx of analyst updates tomorrow. Will we see a long list of earnings, target price and ratings downgrades? Or will analysts focus more about the company's medium-term outlook and operating leverage?

More Macro Weakness

"For FY25, economists are forecasting weaker macroeconomic conditions in most of our markets. Based on our historical experience of similar conditions, we have assumed that paid ad volumes in ANZ will continue to decline throughout FY25," said Seek Chief Executive Ian Narev.

Darling Decline

CSL's full-year result always generates anticipation, and analysts were generally optimistic in the lead-up to the reporting date.

"We continue to see medium-to-longer term EPS growth as favourable for CSL, supported by improved fundamentals for CSL Behring, with the current share price an attractive entry point," Macquarie said in a note last month. At the time, the analysts had an Outperform rating and a $330 target price.

The FY24 result reads well at face value, with revenue and profit up 11% and 15% respectively. These numbers were largely in-line with analyst expectations.

CSL guided to FY25 NPATA of $3.2 billion to $3.3 billion, up approximately 10-13% year-on-year. Unfortunately, the market was looking for $3.38 billion. This equates to a 3.8% miss at the midpoint.

And what happens when you miss earnings expectations? You get smacked -4.5%.

CSL experienced a 2.8% selloff after reporting a softer-than-expected set of numbers during February reporting season. The stock ended up trading sideways for around four months.

CSL price chart (Source: TradingView)

Is consensus too high | Analysts love CSL and most expect the company to deliver EPS growth of approximately 15% per annum over the next five years. But if its FY25 guidance is a little soft ... will that attract a long list of negative EPS revisions? And if so, will that result in more sideways price action?

Temple & Webster's Big Move

Temple & Webster is exactly the kind of stock that either rallies or nosedives more than 20% after its results. The online furniture and homewares retailer reported a clean set of FY24 numbers, including EBITDA of $13.1 million vs. Citi expectations of $10.9 million.

"Temple & Webster has once again bucked the trend with another great set of results for FY24. Revenue was up 26% year on year in a market that was down ~4-5% which shows the strength in our product offering and the value we offer," said Chief Executive Mark Coulter.