The two words that sum up the economy and this earnings season

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Seven Group’s impressive earnings jump shows the four long-term tailwinds powering the Australian economy remain in place.

In the group’s WesTrac mining equipment business, earnings jumped 18 per cent as miners pushed hard on expansion, including in critical minerals.

Yes, Seven’s guidance for EBIT growth in the high single digits in 2024 does reflect a step-down from 2023’s strong conditions. But the medium-term trends powering Seven and the broader economy should make policymakers and investors feel pretty good about the outlook. Seven Group shares have run hard in the last 12 months, surging 47 per cent on the back of its earnings growth story. But there’s a fascinating question whether this stock remains an underpriced gem.

 

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