The local reporting season has only just finished, but it already feels as though the recent round of company results are being superseded by big picture themes. Head of Australian Equities, Tim Binsted, joined Director Jonathan Tolub to share key takeaways, what to watch for in the months ahead, and two stock stories from the season.

Earnings in general were sound, with cost control supporting margins, while stocks that rallied into their results broadly struggled to maintain their momentum.

This was most evident among banks and technology stocks, which were clear winners in 2024 but are off to a tough start in 2025.

In the few short weeks since reporting ended, the macroeconomic picture has become increasingly challenged as the Trump administration ramped up its rhetoric on tariffs. The President, noted for past references to high stock markets as an indicator of success, has recently hinted that weaker markets and a weaker economy may be necessary to achieve his government’s aims.

This has seen a sharp sell-off in US equities that has dragged on the local index and, if sustained, will be a drag on fragile consumer confidence.

But choppy conditions throw up opportunities in the market and there are attractive investment ideas out there that can deliver returns for investors. Two names that stand out in the wake of reporting season, and regardless of the macro turmoil, are Treasury Wine Estates and Nanosonics.

Stock Stories

Treasury Wine Estates (TWE)

Treasury Wine Estates is a vertically integrated wine business selling into more than 70 countries. TWE owns vineyards in the United States, Europe and Australia and has global marketing and distribution.

TWE reported a mixed first-half result with weakness in their low-value portfolio, Treasury Premium Brands, where earnings roughly halved and drove a modest downgrade to full-year earnings guidance. The low-value segment of the market is challenged globally with price-conscious customers and a tepid volume outlook given some changes in consumer behaviour. This is evident in commentary from the industry globally.

However, the core Penfolds business delivered more than 30% earnings growth and is well placed to grow earnings in the double digits over the next few years. This segment constitutes over 60% of group earnings and is a higher value earnings stream given its brand value and premium pricing. TWE trades a mid-to-low teens multiple, offers a solid yield, and there is potential upside if a China recovery materialises.

Nanosonics (NAN)

Nanosonics sells high-level disinfection equipment for ultrasounds, and its Trophon unit has become the standard of care in the Unites States.

As well as selling more units to more sites, the installed base of Trophon’s is subject to a replacement or upgrade dynamic and Nanosonics can sell consumable and service support contracts on top of the unit sales.

The company reported a strong result, rallying more than 30%, and upgraded revenue guidance primarily on a better outlook for consumables and services. These contracts are nice recurring-style revenues that tend to be quite sticky with the customer.

NAN is currently pursuing around 10,000 aged Trophon units that are ripe targets for new service contracts once the unit is upgraded. This is a good near-term opportunity.

The company’s new CORIS product for endoscopes is also getting close to market readiness. NAN has been investing heavily in CORIS and having revenues to begin offsetting those costs and then contributing to earnings will be very positive.

Nanosonics has a very strong balance sheet and is demonstrating solid operating leverage. The only point of caution is the very full valuation, which needs to be managed in terms of position size and relative to the broader portfolio.

For a comprehensive wrap-up of the reporting season, read our full analysis here: https://www.investsense.com.au/industry-articles/asx300-february-reporting-season-wrap-up