European Earnings Are Coming...

European Earnings Are Coming...

over 3 years ago2 mins

Analysts are predicting a big profit turnaround when European companies start reporting third-quarter earnings later this week, but there are a few reasons to be skeptical stock prices will follow suit… 🃏

What does this mean?

It’s true: analysts have been increasing their third-quarter profit expectations for Europe’s companies lately, much like we’ve seen their Stateside colleagues do across the pond. But the bar’s also been set remarkably low: European companies’ profits, after all, plunged by a massive 61% in the second quarter compared to the same period last year 🇪🇺 And while profits are forecast to be higher this time around, they’re still expected to be 29% lower on average than they were the same time last year. Oof.

Daily Brief Image

Why should I care?

Analysts reckon travel and leisure companies – still suffering from the pandemic-induced restrictions – are set to report some pretty bleak numbers, but carmakers, they’ve said, should see the biggest rebound 🚘 And they’re not the only companies with a brighter future to look forward to: health technology firm Philips posted better-than-expected earnings on Monday, largely thanks to the COVID-driven demand for respiratory care devices. Its shares rose on the news – though frustrated investors might’ve missed out on the chance to take advantage when a glitch caused a three-hour outage of European stock markets. This is becoming a bit of a habit: both Japan and Mexico’s main stock exchanges suffered their own technical outages earlier in the month.

Daily Brief Image

It’s worth pointing out that the main European stock index is up 31% from its March lows, suggesting analysts have already bought up stocks to reflect their climbing expectations 🤔 So if stock prices are going to stand any chance of moving any higher, investors might need hard proof that companies are going to keep growing their earnings – which, in this climate, could be hard to come by.

Daily Brief Image
Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG