ASX First Half 2025 Earnings: EPS Misses Expectations

As the first half of 2025 comes to a close, investors in the ASX are left with a bitter taste in their mouths. The much-anticipated earnings season has turned out to be a letdown, with many companies missing their earnings per share (EPS) estimates. But why did this happen, and what does it mean for investors?



The Resources sector, which includes Mining and Energy stocks, was a significant detractor from overall index performance. This sector fell by 18.9% in 2024, contributing to the ASX's lagging performance compared to international peers. Additionally, Banks/Financials were the largest contributors to overall index performance, but they performed "remarkably well" despite a "lack of fundamental earnings and dividend growth," which suggests that their strong performance may have been driven by factors other than earnings growth.

The market reacted negatively to these EPS misses, with share prices falling on the day of the announcements. For example, AGL Energy Limited (ASX: AGL) missed its EPS estimates by a significant margin, with the actual EPS of $0.01 being far below the consensus estimate of $0.12. The market reacted negatively, with AGL's share price falling by approximately 5% on the day of the announcement. Similarly, Codan Limited (ASX: CDA) missed its EPS estimates by a smaller margin, with the actual EPS of $0.04 being slightly below the consensus estimate of $0.05. The market reacted negatively, with Codan's share price falling by around 3% on the day of the announcement.

These EPS misses had a negative impact on share prices and investor sentiment, as reflected in the decline in share prices on the day of the announcements. The market tends to punish companies that miss their earnings estimates, as it often indicates that the company's performance is not meeting expectations. This can lead to a decrease in investor confidence and a subsequent decline in share prices.

So, what can investors do in the face of these EPS misses? It's essential to stay informed and keep an eye on the companies in your portfolio. Make sure to diversify your investments across different sectors and industries to minimize the impact of any one sector's underperformance. Additionally, consider focusing on companies with strong dividend payouts, as these can provide a more stable source of income during market downturns.

In conclusion, the ASX first half 2025 earnings season has been a disappointment for many investors, with many companies missing their EPS estimates. However, by staying informed, diversifying investments, and focusing on dividend-paying companies, investors can navigate this challenging market environment and continue to grow their portfolios.