The ASX sector benefitting from "bulletproof earnings" right now

While it is a stock picker's market, the big picture bifurcation among companies and sectors became extremely apparent this August. Roughly 50% of companies met analysts' earnings expectations, 25% beat expectations, while another 25% missed expectations. But the bigger story was in the outlook statements, with market-wide earnings growth for FY25 dropping from around 10% to just 3%. 

If a company issued soft or even conservative guidance, investors had no problem selling these shares (harshly in some cases). You saw this in the results of such names as Megaport (ASX: MP1) and a2 Milk (ASX: A2M).

Furthermore, the sectors that many investors thought would struggle, like the Big Four banks and consumer discretionary stocks, actually outperformed expectations. 

In fact, the earnings of Commonwealth Bank (ASX: CBA) and the trading updates of its peers gave that sector an air of defensiveness that we have not seen before. With no increase in bad debts, growing margins, and peaking competition, we argue that the sector appears to be bulletproof at the moment.

Also apparent this reporting season was the difference in earnings quality between different operators in the same sector, particularly within housing, as seen with two well-known operators: Stockland (ASX: SGP) vs Mirvac (ASX: MGR).

In this video, my colleague Jason Kim and I recap our thoughts on the August reporting season and where we are finding individual stock opportunities in the post-earnings washup. We'll also discuss our outlook for the next six months and the newest trend of interest to value investors like us - companies like Woolworths (ASX: WOW) paying out big special dividends while others like Suncorp (ASX: SUN) plan to introduce a perpetual buyback scheme - a relative rarity in the Australian market.

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