Peter Warnes says corporate Australia deserves a pat on the back. Faced with a litany of problems from supply chain snarls to rising prices, businesses mostly managed to protect margins, Morningstar’s head of equity research said in a note on Thursday.

“Reporting season has concluded with the outcome generally positive,” he says.

“Given the uncertainty-ridden environment where lockdowns, restrictions and border closures dominated, the Australian corporate sector can take a bow.”

For those looking for a bargain after reporting season, we’ve screened our database for 10 companies with economic moats trading at double-digit discounts to fair value. Economic moats are awarded to companies with competitive advantages expected to last between ten to twenty years

Magellan Financial Group (ASX: MFG)

Reporting season was a brief reprieve for troubled Magellan Financial Group. The investment manager reported that its underlying net profit grew 16% to $248 million, exceeding analyst expectations. The narrow-moat company also announced an options grant with a strike price of $35 and is mulling a share buyback.

“It was like an oasis in the desert, amid the deluge of negative headlines in recent months,” says Morningstar equity analyst Shaun Ler.

Magellan shares leaped 18% on reporting day but have since reversed gains. Magellan closed on Thursday at $16, a 52% discount to Ler’s fair value of $33.

“Magellan is for the patient investor,” he says. “For shares to re-rate, Magellan Global needs to outperform. We are confident this will happen over the medium term.”

AGL Energy (ASX: AGL)

AGL’s better-than-expected reporting season was overshadowed by the $5 billion bid lobbed by Atlassian co-founder Mike Cannon-Brookes and Canadian asset manager Brookfield.

The energy producer and retailer reported underlying profit fell 41% to $194 million, slightly ahead of his forecasts, says Morningstar senior equity analyst Adrian Atkins.

Management rejected the Brookes-Brookfield bid on the grounds it materially undervalued the company. Atkins backs the move, saying rising electricity prices and the upcoming demerger of the generation business will mean a better deal for shareholders in the future.

The consortium has hinted future bids could be in the offing. AGL shares have hovered just off the $7.50 first bid price since. They last closed on Wednesday at $7.36, a 45% discount to Morningstar’s fair value.

Wisetech Global (ASX:WTC)

Cloud-based logistics software provider Wisetech Global “shot the lights out” as it reported a 77% jump in underlying profit to $77.3 million. Management also upped earnings guidance by 5% for fiscal 2022.

The strong performance exceeded expectations and Morningstar equity strategist Gareth James raised his fair value by 8% to $65.

“Despite the relatively high price-to-earnings ratio and macroeconomic challenges, we still consider WiseTech to be significantly undervalued,” says James.

Shares see-sawed up then down in the days following the result. They closed on Thursday at $46.58, up 9% since reporting last week.

The a2 Milk Company (ASX: A2M)

Reporting season provided much-needed good news for a2 Milk investors. The narrow-moat dairy products company reported a lift in sales growth and kicked off a marketing blitz. This comes a after shares halved as border closures hit its all-important Chinese market.

Shares jumped 11% on last Monday’s earnings. They’ve since eased to $5.41 as of Thursday, a 2.1% gain since reporting. a2milk is trading at a 29% discount to Morningstar’s fair value of $7.60.

“We remain optimistic for a2's growth potential in Chinese infant formula, and our longer-term forecasts remain broadly intact,” says Morningstar equity analyst Angus Hewitt.

Pinnacle Investment Management (ASX: PNI)

Narrow-moat Pinnacle was caught up in the general sell-off of asset manager stocks despite its strong first-half results, says Morningstar’s Ler.

The investment manager delivered double-digit growth that took funds under management to $94 billion from $89 billion. Profit margins at its fund affiliates are up to 42% compared to 36% two years ago.

Shares have declined 14% since the 3 February announcement, presenting investors with a buying opportunity, says Ler.

“Pinnacle boutiques remain good quality and have a strong runway to attract new money and grow funds under management,” he says.

Pinnacle closed on Thursday at $10.10, a 27% discount to the fair value of $13.90.

Aurizon Holdings (ASX: AZJ)

Rail freight operator Aurizon had a relatively good first-half result, says Morningstar’s Atkins. He remains bullish about the medium-term outlook as coal traffic on its rail network rebounds and tariffs increase in line with inflation.

The company reported a 1% fall in earnings before interest, tax, depreciation and amortisation (EBITDA) to $727 million. Adjusting for a one-off windfall in the previous period would have seen a “respectable” 5% increase, says Atkins.

Dividends were cut 27% following the company’s decision to reduce its payout ratio from 100% to 75% to fund a rail acquisition. Atkins forecasts a 6.2% mostly franked dividend yield for fiscal 2022.

Shares rose nearly 4% after reporting results on 14 February until they were caught up in the Ukraine market selloff. Aurizon closed on Thursday at $3.57, a 24% discount to the fair value of $4.70.

Westpac Banking Corporation (ASX: WBC)

Westpac shares have rallied steadily since it reported a modest jump in profit and a fall in operating expenses early in February.

Profit jumped 1% to $1.58 billion after excluding notable items. Expenses dropped 7% to $2.7 billion, similarly excluding notable items. Shares are up 9% as of the 3 February report.

The long-term outlook is good for the only undervalued major bank, says Morningstar equity analyst Nathan Zaia. He expects rising interest rates to reflate margins and is bullish on the bank’s $8 billion cost-cutting program.

Shares closed on Thursday at $22.47, a 23% discount to the fair value of $29.

TPG Telecom Limited (ASX: TPG)

Despite a small fall in normalised earnings in 2021, the key planks for a positive outlook remain, says Brian Han, Morningstar director of equity research.

EBITDA fell 3% to $1.7 billion in 2021 compared to the previous year.

Han’s bull case rests on signs of recovery in its mobile business, an acceleration in the $125 million cost savings from the TPG-Vodafone merger and growing subscribers in the latter half of the year.

Shares fell 5.3% in the two days after the 24 February announcement before staging a rebound this week. They closed on Thursday at $5.83, a 21% discount to the fair value of $7.40.

AUB Group (ASX: AUB)

The second-largest broker network across Australia and New Zealand reported double-digit profit growth last Tuesday.

Underlying profit jumped 16.7% to $30.6 million, while margins expanded 70 basis points to 31.2%.

Shares dipped on earnings and are down 7.3% since the 22 February announcement. Zaia says markets wanted to see more profit growth, but he backed management’s decision to invest in technology for future growth.

Narrow-moat AUB closed on Wednesday at $21.75, a 19% discount to the $27 fair value.

Brambles (ASX: BXB)

Wide-moat Brambles shares are rising after management reported earnings ahead of Morningstar’s expectation last Friday.

The world’s largest pallet pooling provider announced EBIT of US$481 million, leading Morningstar equity research analyst Mitchell Hawker to raise his full-year forecast by 3% to US$920 million.

Brambles delivered a “reasonably strong” result despite soaring prices for lumber, labour and transportation, says Hawker. Margins slipped because the firm was not able to fully pass on rising prices, but Hawker expects that to recover in the second half as contracts are adjusted upwards.

Shares are up 2.3% since reporting and closed on Thursday at $10.12, a 20% discount to the fair value of $12.70.