Investors looking at the upcoming European earnings season will see a robust outlook for the continent’s blue‑chip companies. The latest LSEG I/B/E/S consensus forecasts a 21% aggregate earnings increase for STOXX 600 constituents in the third quarter, an improvement over the 19.4% estimate released last week. This would represent the second‑best quarterly profit surge in the past 14 quarters.
Energy sector powers the gains
Energy majors are the primary engine of the projected growth. The LSEG data suggest these firms could post a staggering 115.9% rise in profit for the quarter, a result of higher prices for oil and gas that have not been fully passed on to consumers. The surge is linked to the ongoing U.S.–Israeli conflict with Iran and recent Ukrainian drone attacks on Russian refineries, which have constrained supply from some of the world’s largest fossil‑fuel producers.
Basic materials and broader market performance
Basic materials companies also contribute to the upbeat picture, helping lift the overall earnings forecast. When the energy sector is excluded, the expected earnings growth for the STOXX 600 falls to a more modest 9.7%, still above the average of recent years. Revenue growth across the index is projected at 10.6% year‑over‑year, reinforcing the trend of expanding top‑line performance.
Real‑estate faces headwinds
Not all segments share the optimism. The European real‑estate sector is expected to deliver earnings that are 71.5% lower than a year ago, reflecting weaker demand and higher financing costs. Analysts note that the sector’s challenges contrast sharply with the strength seen elsewhere in the market.
Key companies to watch
Investors will focus on the results of ASML, the Netherlands‑based chip‑equipment supplier and Europe’s most valuable listed company, as well as Sweden’s telecom‑equipment maker Ericsson. Their earnings reports will help set the tone for the broader European earnings season.
Analyst commentary
Deutsche Bank highlighted that “demand is strong enough to allow companies to pass on higher prices which leads to higher sales. At the same time, energy costs make up a smaller share of sales than headlines would suggest.” The bank’s assessment underscores the balance between price pressures and cost structures that many firms are navigating.
Overall, the outlook points to a resilient European corporate landscape, with energy and basic materials leading the charge while real‑estate grapples with a tougher environment. The upcoming earnings releases will provide a clearer picture of how these dynamics play out in practice.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
