Key facts
- European blue-chip companies are expected to achieve aggregate earnings growth of 23.4% in the second quarter.
- The energy sector is projected to see profits more than double year-over-year.
- Basic materials is the second-fastest growing sector, with earnings expected to rise nearly 70%.
- Excluding energy, STOXX 600 companies are still expected to report earnings growth of 12.3%.
- Revenue growth for STOXX 600 companies is forecast at 11.4%.
Europe's blue-chip companies are heading into one of their strongest earnings seasons in years, with second-quarter profit expectations for the STOXX 600 index companies rising for an eighth consecutive week. Aggregate earnings growth is now projected at 23.4%, driven significantly by soaring profits in the energy and basic materials sectors.
Energy companies are expected to more than double their profits compared to a year ago, fueled by higher oil prices. The basic materials sector is also anticipated to see substantial growth, with earnings projected to rise by nearly 70%. Even excluding the energy sector, STOXX 600 companies are still expected to report earnings growth of 12.3%, indicating a broader recovery beyond commodity price surges.
Revenue growth is forecast to be more modest, with STOXX 600 companies expected to increase sales by 11.4%, a slight decrease from the previous week's estimate. So far, 58.6% of the companies that have reported results have exceeded analyst expectations, which is above the typical quarterly average of 54% observed since 2012.
Despite the strong reporting season, investors remain focused on the sustainability of this earnings momentum in the latter half of the year, given the backdrop of slowing global growth and ongoing geopolitical tensions.