European Blue-Chip Earnings Growth Hits Two-Year High
STOXX 600 Q2 earnings growth is projected at 22.4%, the fastest since 2022, led by energy and basic materials.
European blue-chip companies are poised to post their sharpest quarterly earnings growth in nearly two years, according to the latest data from LSEG I/B/E/S. Based on results from 236 firms and market projections for the rest, companies on the STOXX 600 index are expected to report a 22.4% year-on-year increase in profits for the second quarter.
The surge is largely attributed to exceptional performance in the energy sector, where profits are estimated to have grown by 135.8%. Basic materials companies, including miners, steelmakers, and chemical firms, are also expected to contribute significantly, with projected growth of 57.6%.
Even when stripping out the energy sector, the outlook remains robust. Excluding energy, STOXX 600 earnings are forecast to rise by 11.5% compared to the same period last year. This marks a substantial upgrade from the 5.5% growth rate anticipated in early July, before the earnings season began.
Revenue expectations have also improved. Aggregate revenues for the index are now projected to grow by 12.6%, up from the 11.7% estimate from the previous week. If realized, this would represent the fastest revenue growth in 16 quarters.
The positive earnings momentum comes as European shares closed at a record high for a third consecutive session on Thursday. Investors were buoyed by the largely favorable earnings reports and were also assessing the potential for a U.S.-Iran peace deal, which could lead to the reopening of the Strait of Hormuz.