Australian-listed companies are still lagging behind the strong earnings growth being seen in the rest of the world, says UBS.
With reporting season around 80 per cent complete, Australian companies are on track for an "overall quite decent" performance, says UBS analyst David Cassidy.
Estimates for the 2017-18 and 2018-19 periods have "basically held", which is slightly better than the norm for Australian reporting season, Mr Cassidy said.
However, Australian earnings continue to lag the global uptrend, in terms of both earnings growth rate and earnings revision rate (which have been "very positive" globally).
"The Australian listed corporate sector (much like the Australian economy) is showing relatively muted leverage to the global economic revival that is buoying earnings globally," Mr Cassidy said.
While there have been plenty of earnings upgrades – including the likes of Magellan Financial Group, Treasury Wine Estates and Insurance Australia Group – there have been "significant downgrades" for companies such as BHP, CBA and Domino's Pizza Enterprises.
Cost pressures are starting to bite in some sectors of the Australian market, leading to margin pressure in a number of disappointing results, Mr Cassidy said.
"The Australian market has partially recovered from its early month swoon due to US inflation jitters and currently sits on 15.1x one-year forward expected earnings which looks fair to us," Mr Cassidy said.
But while the current earnings season is supportive of ongoing market gains, Australia's aggregate growth rate is "pedestrian" in a global context, he said.
"While reporting season has confirmed pockets of growth, we think valuations are no bargain," Mr Cassidy said.