European majors set for Q3 earnings growth despite darkening view on consumer cyclicals
SPY•European STOXX 600 companies are expected to post 20.7% aggregate third-quarter earnings growth, down from last week’s 21% forecast, while revenue growth estimates rose to 11.0%. Consumer cyclicals are now forecast to see earnings fall 2.6%, compared with projected growth of 26% a week ago.
1. Earnings forecasts diverge
Companies in the STOXX 600 are expected to report 20.7% aggregate earnings growth in the third quarter, led by energy companies. Analysts raised average sales growth estimates to 11.0% from 10.6% a week ago.
2. Consumer outlook weakens
Analysts now expect consumer cyclicals, including automakers and luxury firms, to post a 2.6% earnings decline, versus forecast growth of 26% last week. The downgrades followed lower third-quarter deliveries at Volkswagen and BMW, mainly due to slumping demand in China; Volkswagen recorded its steepest drop in more than four years.
3. Energy and tech estimates rise
Higher forecasts for energy and technology offset most of the consumer-sector downgrade. Energy earnings growth estimates rose to 124.0% from 115.9%, and technology estimates increased to 32.7% from 24.4% after ASML and Ericsson beat market estimates. Investors will be watching results next week from SAP, ABB and Barclays, among 44 STOXX 600 companies due to report.
