Goldman Sachs: European earnings beat expectations

Investing.com -- Goldman Sachs reports that European companies are exceeding earnings expectations during the current reporting season, with approximately two-thirds of the STOXX Europe 600 having released results. Average earnings per share surprises are running at around 3%, slightly above the long-term average.

First-half EPS growth is tracking at 13% year-over-year, marking the strongest pace in three years. This growth occurred despite a renewed energy supply shock. Excluding commodities, EPS growth stands at approximately 7%, while the median stock in the STOXX 600 is delivering earnings growth of around 7% year-over-year, close to the median stock in the S&P 500.

All sectors except Basic Resources and Consumer Discretionary have been revised upward since the start of the reporting season. Technology, Financials, and Commodities showed the strongest positive surprises. Consumer sectors were the main source of disappointment, reflecting softer demand trends.

Earnings sentiment, measured as the percentage of companies revised up minus the percentage revised down, has climbed to its highest level in more than three years. Over the past month, only one-third of STOXX 600 companies have seen their earnings revised down, while more than half received upgrades.

Market reactions to earnings results have been stronger than historical norms, with beats and misses rewarded or penalized by roughly 2% on average. Some AI-exposed technology names, including ASML, Nokia and ASM International, were not rewarded on results day despite beating earnings expectations.

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