8 ASX stocks Morgans is watching this reporting season

February reporting season arrives at a critical juncture for Australian equities. After three years of flat to negative earnings growth, FY26 is shaping up as a genuine inflection point for corporate profits. But as Morgans points out in its February 2026 Reporting Season Playbook, better earnings do not guarantee an easier market environment.

Valuations remain elevated across parts of the market, particularly among quality growth stocks, while banks face a high bar for further multiple expansion. At the same time, the structure of markets has shifted in ways that amplify volatility. 

Passive flows, quant strategies and algorithmic trading are now a dominant force in result-day price action, often exaggerating moves well beyond what fundamentals alone would imply.

Against this backdrop, Morgans argues that February reporting season will be defined by widening stock-specific outcomes rather than the direction of broader indices and market. Earnings growth is broadening, sector leadership is evolving, and stock selection is becoming increasingly important. 

The challenge is not predicting the index, but identifying where expectations are misaligned with fundamentals and being prepared to act when volatility creates opportunity.

Morgans’ playbook sets out its key calls, where earnings momentum is improving, which sectors offer more attractive risk-reward, and which stocks face asymmetric outcomes this reporting season.

Key calls to watch this reporting season

Morgans highlights a select group of stocks where upcoming results could prove particularly influential, either through upside surprise or heightened downside risk.

Potential beats

Lovisa (ASX: LOV) - what to watch

“We expect a solid half result driven by strong topline growth, network expansion and robust gross margins.”

• 1H26 EBIT: $105m, up 16.9% YoY, driven by store rollout rather than LFL sales.
• Store rollout: Net 59 new stores, taking total to 1,090, skewed to the U.S., U.K. and Canada.
• Gross margin: 81.8%, down 65bps YoY but improving versus 2H25.
• Trading update expected: 2H YTD sales, LFL (+3.5% forecast) and store count.
• Valuation: Trading below long-run average PE after a 25% share price decline since August 2025. 

Monadelphous (ASX: MND) - what to watch

“Expecting topline growth to be in line with recent guidance with potential for margins to surprise to the upside due to significant growth in E&C.”

• 1H26 revenue: ~$1.5bn, up 40% YoY, in line with AGM guidance.
• 1H26 EBITDA: $101m, 6.8% margin.
• 1H26 NPAT: $54m, up 42% YoY.
• Key upside risk: Margin mix driven by strong E&C activity.
• Reporting season focus: Margins, not revenue.
• Share price context: Up 20% YTD and 116% over the past year.

NEXTDC (ASX: NXT) - what to watch

“We expect a solid result attributable to increased MWs contracted in the half and a substantial pipeline.”

• Contracted MWs: Up 167 HoH to 402MW, the largest contracting period on record.
• FY26 guidance reaffirmed: Net revenue $390–400m, underlying EBITDA $230–240m.
• 1H26 underlying EBITDA: $110.1m, up 4.5% YoY, representing 46% of full year EBITDA.
• Reporting season focus: Execution, utilisation and conversion of contracted MWs rather than headline earnings.
• Growth pipeline: 500MW across S4 and M4 developments
• Share price context: Down ~10% over the past 12 months, heightening sensitivity to execution updates.

NRW Holdings (ASX: NWH) - what to watch

“We expect a strong 1H26 result with scope to re-rate to 11x FY26/27 in the near term.”

• Earnings momentum: Improving after a challenging FY25, with prior headwinds now largely in the rear-view mirror.
• 1H26 EBITA forecast: $120m, up 23% YoY.
• 1H26 NPATA forecast: $76m, up 29% YoY.
• FY26 EBITA forecast: $264m, toward the top end of guidance, which Morgans views as conservative.
• Reporting season focus: Earnings delivery and guidance confirmation
• Medium-term support: Strengthening Pilbara project pipeline and a recovery in metallurgical coal prices support momentum into 2H26.

Sigma Healthcare (ASX: SIG) - what to watch

“We expect a stronger first half skew reflecting the seasonal strength of the flu season and Christmas sales.”

• Earnings skew: 1H26 expected to account for ~54% of full-year earnings following the Chemist Warehouse merger.
• Key number to watch: Underlying EBIT of $602.6m, which Morgans notes is 54% of its FY26 forecast
• FY26 forecast: Underlying EBIT of $1,116.0m.
• Reporting season focus: Confirmation of earnings delivery and FY26 guidance.
• Seasonal support: Flu season and Christmas trading support first-half earnings skew.
• Share price context: Up 11% over the past 12 months, following a ~300% rally since late 2023 after plans to merge with Chemist Warehouse

Gemlife Communities Group (ASX: GLF) - what to watch

"Positioned to meet and potentially exceed CY25 earnings forecast driven by higher-than-expected settlements." 

• Key driver: Higher-than-expected settlements, with 233 homes under contract and additional stock under expressions of interest.
• CY25 outlook: Morgans sees scope to meet and potentially exceed earnings forecasts as settlements track ahead of prospectus assumptions.
• Settlement visibility: Short build times (~4 months) support delivery of 2HCY25 forecast settlements.
• Reporting season focus: Settlement volumes rather than pricing or margins.
• Medium-term setup: Morgans forecasts higher settlement volumes in CY26, supporting earnings growth beyond the transitional CY25 year.

Potential misses

Suncorp Group (ASX: SUN): On the downside, Morgans expects “a softer result affected by bad weather and the subsequent higher level of hazard claims management has disclosed,” highlighting claims volatility risk.

Reliance Worldwide (ASX: RWC): Morgans expects a broadly in-line first-half result but flags that "rising copper prices" pose a risk to outer-year earnings, particularly FY27.

Earnings growth is broadening, but expectations remain unforgiving

Morgans views the earnings backdrop as the most constructive in several years. 

After prolonged stagnation, “the ASX200 is forecast to deliver 8.8% earnings growth in FY26 — the strongest expansion since FY22.”

Importantly, this recovery is no longer narrowly concentrated. Morgans notes that “Materials is forecast to grow earnings at 19.4%, Consumer Staples at 11.9%, and Healthcare at 13.8%,” signalling a broadening of earnings leadership across the market.

However, investors should not expect smoother share price reactions. 

Morgans cautions that recent reporting seasons were among the most volatile on record, and that “misses were punished much more harshly than beats were rewarded,” particularly where starting valuations and expectations were elevated.

Sector views: valuation discipline is critical

While earnings momentum is improving, Morgans stresses that valuation remains the binding constraint across many sectors.

Materials stands out as offering both earnings growth and valuation support. Trading at around 16 times FY26 earnings with nearly 20% growth forecast, Morgans sees Resources as well positioned, particularly given underweight investor positioning outside of gold.

By contrast, Technology appears vulnerable. Morgans highlights that the sector trades near 100x FY26 earnings despite declining earnings momentum, leaving little margin for disappointment. Media and Retail also trade north of 29x earnings with only modest growth outlooks.

Banks remain fundamentally sound, supported by higher-for-longer rates and stable asset quality, but Morgans warns that “further multiple expansion will require genuine upside surprises to growth,” a high hurdle for large-cap financials.

Lower correlations are reshaping reporting season outcomes

Morgans’ playbook emphasises that market conditions increasingly favour active stock selection. Correlations across the ASX 200 have fallen below long-term averages, driving greater stock divergence within sectors.

“Stock performance across the ASX 200 continues to diverge as investors shift away from macro-driven positioning toward individual stock selection,” Morgans observes. 

This is being reinforced by algorithmic and hedge-fund activity that accelerates result-day moves.

Morgans expects volatility similar to August 2025, warning that “a repeat of August volatility appears likely.” 

The analysts encourage investors to plan for this environment rather than react to it, particularly by avoiding crowded trades and being ready to act when price moves disconnect from medium-term value.

Short positioning and asymmetric risk

Finally, Morgans highlights that elevated short interest heading into February results reflects “stock-specific earnings risk rather than broad market pessimism.”

Short positions remain concentrated in growth stocks and selected resource names, setting up the potential for sharp, asymmetric price reactions. Where expectations are stretched, downside risk is amplified. Where expectations are conservative, positive surprises can have outsized impact.

Morgans argues that February reporting season will favour the prepared and selective over the complacent.