CONTRIBUTORS
Reece Birtles, CFA, GAICD
Head of Australian Equities
ClearBridge Investments Australia
Reporting seasons offer a timely window into how companies are navigating these challenges. Through results, guidance and direct engagement with management teams, the ClearBridge Australian Equities team has been assessing the resilience of earnings moats, including how emerging technologies such as AI may strengthen competitive advantages for asset-heavy or process-driven companies while exposing vulnerabilities in more service-oriented business models.
In our reporting season wrap, we share our key insights, earnings signals from company results and meetings, and where the team sees the most compelling valuation opportunities as we look toward 2026.
Key Takeaways
- Strong earnings outcomes, but limited upgrades
Earnings, dividends and revenue broadly met or exceeded expectations, reflecting improved economic conditions. However, revisions remained muted as companies and analysts tempered optimism with macro and consumer-related uncertainties. - Elevated price dispersion despite modest revisions
Share price reactions were extreme relative to the underlying earnings changes, particularly among large caps. Tight liquidity and index flows continue to amplify market moves, with winners and losers seeing outsized divergence. - Broad-based growth, led by financials and cyclicals
Earnings growth has accelerated across most sectors, with banks benefiting from strong credit growth and limited margin pressure, and resources supported by higher commodity prices and improving global demand. - AI reshaping competitive moats unevenly
AI is emerging as both a tailwind and a threat. Incumbent, asset-heavy businesses are already realising productivity gains, while software and service models face competitive pressure. - Valuations resetting, dispersion remains wide
Software stocks have begun to de-rate as longterm earnings assumptions are reassessed, yet the valuation gap between expensive and cheap stocks remains historically elevated. - Implications for investors
In a market defined by structural change, macro uncertainty and heightened dispersion, a disciplined, risk-aware approach is critical.
Important information
Franklin Templeton Australia Limited (ABN 76 004 835 849) is part of Franklin Resources, Inc., and holds an Australian Financial Services Licence (AFSL No. 240827) issued pursuant to the Corporations Act 2001. The ClearBridge Australian Equities Investment Team, a division of Franklin Templeton Australia Limited, is operationally integrated under the “ClearBridge Investments” global brand, alongside ClearBridge Investments, LLC (“CBI”), and other ClearBridge entities indirectly wholly owned by Franklin Resources, Inc. Distribution of this material is issued and approved in Australia by Franklin Templeton Australia Limited.
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Some of the information provided in this video has been compiled using data from a representative account. This account has been chosen on the basis it is an existing account managed by the investment team, within the strategy referred to in this video. Representative accounts for each strategy have been chosen on the basis that they are the longest running account for the strategy. This data has been provided as an illustration only, the figures should not be relied upon as an indication of future performance. The data provided for this account may be different to other accounts following the same strategy. The information should not be considered as comprehensive and additional information and disclosure should be sought.
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Risk warnings - Investors should also be aware of the following risk factors which may be applicable to the strategy shown in this video.
- Investing in foreign markets introduces a risk where adverse movements in currency exchange rates could result in a decrease in the value of your investment.
- This strategy may hold a limited number of investments. If one of these investments falls in value this can have a greater impact on the strategy’s value than if it held a larger number of investments.
- Smaller companies may be riskier and their shares may be less liquid than larger companies, meaning that their share price may be more volatile.
- The strategies mentioned may invest in derivatives (index futures) to obtain, increase or reduce exposure to underlying assets. The use of derivatives may restrict potential gains and may result in greater fluctuations of returns for the portfolio. Certain types of derivatives may become difficult to purchase or sell in such market conditions.
- Income strategy charges are deducted from capital. Because of this, the level of income may be higher but the growth potential of the capital value of the investment may be reduced.
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