Bell Direct went into the season expecting flat to low single-digit earnings growth. That is broadly what was delivered, with a few positive and negative outliers.  

With headwinds impacting almost every sector, investors went into this period with low expectations. Risks included: 

• tariff implications for global inflation.
• foreign exchange movements.
• subdued demand. 
• China’s weak economic recovery continuing.
• high cost-of-living pressures.
• geopolitical tensions escalating.

However, in Bell Direct’s view, the focus on a conservative outlook for FY26 from companies could see upgrades to earnings guidance become a key theme over first-half FY26. 

In Bell Direct’s opinion, a few standout performances, such as those from ResMed Inc (ASX: RMD), Credit Corp Group (ASX: CCP), and Baby Bunting Group (ASX: BBN) showed that solid operational performance can drive solid results and positive share-price reactions.  

But for many companies, the margin for error has shrunk. Earnings guidance has become a key driver of investor sentiment.  

It's no longer just about beating market expectations but delivering a clear, confident outlook for FY26 and beyond. 
 

Earnings 

The earnings story has been one of cost pressures, varied performance and mostly a slowdown in earnings growth across the board.  

In Bell Direct’s opinion, companies like Beach Energy (ASX: BPT) and REA Group (ASX: REA) weathered macroeconomic challenges, posting solid earnings.  

However, rising costs, be it from supply chain disruptions, inflationary pressures, or higher operating expenses, have weighed on many results.  

Other sectors, like telecommunications and retail, Bell Direct has observed, are feeling the pinch even more acutely. 

As a result, companies that balanced cost management with growth stood out in a sea of otherwise mixed performances. 

Clearly, earnings growth is no longer the only measure of success; investors are placing increasing importance on a company's ability to manage costs, raise prices to maintain profit margins and provide clear guidance for the future.  

Companies that have successfully navigated these challenges posted strong earnings and maintained or increased their dividends, signalling financial strength and stability to investors. 
 

Dividends 

Dividends were a key theme in this earnings season. Companies that maintained or increased dividend payouts often saw positive investor reactions.  

Investors are particularly attuned to dividend stability in the current environment. The broader economic uncertainty makes it more important than ever for companies to demonstrate financial health and resilience. 

In Bell Direct’s opinion, dividend consistency can be an indicator of a company's ability to weather uncertainty and provide value to shareholders, which is a consideration for many investors as they look to FY26. 

Conversely, companies that cut or froze dividends, especially those facing significant cost pressures, experienced weaker share price reactions. Some investors may see a dividend cut as a red flag, signalling potential trouble ahead. 
 

Best-performing sectors 

This profit season has highlighted a clear divide between sectors that thrived and those that struggled to handle headwinds. In Bell Direct’s opinion, standout performers were healthcare, real estate, and financial services. 

In Bell Direct’s view, ResMed's results highlighted the healthcare sector's strength, with the company demonstrating solid growth in revenue and margins.  

The use of Artificial Intelligence (AI) and other new technologies in healthcare has been a consistent theme.  

Bell Direct observed that the real estate sector, particularly online property platforms like REA Group, also posted strong results, with revenue growth and increased market share.  

Despite challenges in the property market, REA maintained growth and expanded into international markets.  

In Bell Direct’s view, diversified real estate plays with exposure to the growing data centre theme, such as Goodman Group (ASX: GMG), also outperformed this reporting season. Exposure to the infrastructure required to run the AI revolution is increasingly playing a fundamental role in many investor portfolios.  

Similarly, financial services saw strong performances from companies like Credit Corp (ASX:CCP), which benefited from growth in its US operations and solid debt-collection results.  

However, the telecommunications and energy industries faced tougher market conditions. The energy sector, while benefiting from higher demand for resources like gas, confronted rising costs and volatile pricing.
 

Outlook, risks 

The outlook remains cautious, with many companies signalling FY26 will be challenging due to rising costs, market uncertainties, and changing consumer behaviours.  

Key risks identified in this earnings season were rising costs, uncertainty in global trade policies, and shifting consumer behaviour.  

Inflationary pressures continue to affect a wide range of sectors. Companies are under increasing pressure to manage costs while maintaining margins. 

Tariff uncertainty, particularly in relation to markets like China, is a significant concern for companies with international exposure. 

Fluctuations in global trade policies can significantly impact earnings, leading to heightened volatility in stock prices. In Bell Direct’s view, this is evident with Treasury Wine Estates (ASX: TWE) and BHP Group (ASX: BHP).

The reintroduction of tariffs on certain products has led to lower-than-expected sales and earnings, especially for companies that rely on Asia for a large portion of their revenue. 

Finally, shifting consumer behaviour, whether due to inflation, rising interest rates, time-poor lifestyles driving online spend, or general changing preferences, has also been flagged as a risk. Discretionary spending has shown signs of slowing especially in sectors like retail and consumer goods.

Companies that rely heavily on consumer spending are closely monitoring this trend and adjusting their strategies accordingly.  
 

Conclusion 

The FY25 earnings season underscored the importance of cost management, clear guidance, and dividend stability.  

In FY26, companies that navigate these challenges and provide investors with a clear, confident outlook will likely be the most successful in maintaining investor confidence and delivering long-term growth. Those with ambitious growth targets and high cost pressures may face investor scepticism in the near-term.  

In Bell Direct’s view, also worth watching during earnings season was a shift out of some big blue-chip winners of FY25 into undervalued small to mid-cap stocks for FY26.