(Finance) – With around 90% of the companies in the Stoxx 600 who published their quarterly results, the Third quarter earnings per share growth remains stronger than expectedup 5% year-over-year, compared to the 5% decline in earnings that consensus expected at this reporting stage. While part of the positive growth surprise was due to a sharp cut in sell-side consensus numbers shortly before the start of the reporting season, which was quickly reversed in the first few weeks of reporting, both third-quarter earnings per share estimates quarter and the fourth quarter have been constantly revised upwards in recent weeks. Analysts say so Bank of America (BofA).
One of the main reasons was the Financial sectorwith solid results in the sector, and in particular for Bankswhich increased the overall gains of the index. The consensus expects third-quarter earnings per share growth of 3% year-over-year for the full season, up from -1% about a month ago and only a modest decline from the 6% growth seen in the second quarter. quarter. Excluding the Financials sector, however, third quarter earnings growth is -6% and is expected to end the season at -7%. This marks a sharp deceleration from the 3% growth recorded in the second quarter, with energy and discretionary consumer goods (mainly cars and luxury goods) as the main drags.
The 52% of Stoxx 600 companies beat EPS estimatesdown from 55% at the start of the season, but still well above the sub-50% levels implied by the euro area’s deeply negative economic surprises in the third quarter. Sales beats remained weak, however, at 41%, well below the long-term average of 53%. Banks (88%), insurance (78%) and financial services (70%) recorded the highest EPS beats so farwhile real estate (27%), auto (29%) and industrial goods (31%) recorded the lowest. Cyclical stocks, excluding financials, posted the weakest EPS beat ratio in six years, at 39%, while defensive stocks fared significantly better, at 51%, nearly the largest spread in favor of defensive stocks in ?? a decade.
Only 42% of companies in major countries (Germany, France) exceeded EPS expectations, versus 63% of peripheral companies (Italy and Spain).