European Corporates Show Resilience Amid Earnings Forecasts
The European corporate health outlook has improved according to the latest LSEG I/B/E/S forecast, showing a slight decrease in the expected decline in earnings. While many companies exceeded analyst expectations, revenue estimates still predict a drop. European firms face challenges compared to their U.S. counterparts, reflecting differing economic trajectories.
The outlook for European corporate health has brightened, according to the latest LSEG I/B/E/S forecast released on Wednesday. Current data indicates a less severe drop in fourth-quarter earnings for 2025 than previously anticipated. Analysts now predict a 0.6% decline, an improvement from last week's 1.1% forecast.
Among the 163 companies on Europe's STOXX 600 index that have reported earnings, 57.1% have surpassed analyst estimates. Although revenue projections have shown improvement, a 2.4% decrease is still expected. This underlines a recurring trend where earnings growth outpaces revenue gains over recent quarters.
Concerns for European corporate earnings had intensified following U.S. tariff plans, which disrupted trade expectations. Initially, earnings growth was projected at 11% but was later revised to a potential 4.2% contraction. Despite challenges, European firms have adapted, and while the earnings outlook remains subdued, contrastively, U.S. S&P 500 companies are forecasted to see a robust 13.6% growth.
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