Rudi's View | 3:51 PM
Interim assessment and observations from the February results season which is mostly surprising to the upside.
By Rudi Filapek-Vandyck, Editor
At face value, the February results season is generating plenty of signals indicating the Australian economy is doing just fine, thanks for asking.
One might even conclude results from the first 107 companies reporting vindicate the RBA's decision to crank up the official cash rate earlier in the month, with possibly more to follow.
Look no further than analysts continuing to upgrade their forecasts for the year(s) ahead. As reported by UBS earlier this week, ASX200 earnings growth has now reached 12.1% for FY26.
This is up from 11.7% projected a week earlier and just 3.0% six months ago.
A reminder to everyone: that number had been negative for each of the preceding three financial years in Australia.
So corporate Australia is staging a Big Bang comeback in terms of a sizeable earnings upswing, which likely has further to run too.
The past 20 trading sessions (early results were released in late January) have offered plenty of examples of companies that previously, as a matter of speech, couldn't put a dent in a soggy pack of butter but whose financial performance this time around proved of much improved magnitude and quality.
AGL Energy ((AGL)), Aurizon Holdings ((AZJ)), the ASX ((ASX)), Baby Bunting ((BBN)), Magellan Financial ((MFG)), Orora ((ORA)) and Viva Leisure ((VVA)) are just a few of the names for which investor interest might well have re-awoken.
But things are not necessarily as rosy as those face value observations suggest. Look more closely underneath the share market's bonnet and we're left with the conclusion that outside of banks and resources, that newfound momentum in profitability is not widespread.
As a matter of fact, take out those two sectors and corporate earnings growth in Australia looks a whole lot less ebulliant. As strategists at Wilsons observed this week:
"The market’s earnings upgrade cycle remains narrowly concentrated within the Materials sector, with Mining companies continuing to account for the vast majority of positive EPS revisions. Outside of Resources, revision momentum remains subdued."
The good news remains many of the major representatives for both key sectors for the Australian bourse continue to support this month's positive vibes, with both sector leaders CommBank ((CBA)) and BHP Group ((BHP)) releasing results that surprised to the upside.
Gold miners are equally no longer testing investor nerves with disappointing financial updates. Retail landlords seem back in a strong negotiating position (REITs are equally among the stand outs this season), while the report thus far for the healthcare sector and consumer companies is more mixed.
If there's one obvious warning signal to point out it is that retailers are seeing their pace of growth slowing down in 2026. This might be an initial response to the RBA's rate hike, which had been well flagged in advance.
Increasingly the prospect of more USD weakness, and thus a stronger AUD, is creeping into investors' awareness, which might keep a lid on overall enthusiasm for foreign earners outside of resources this season.
For what it's worth, the abovementioned strategists at Wilsons are keeping the faith in:
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