European-Related Earnings Revisions

With the European Market’s earning season fully upon us, let’s look at expectations for the month ahead. According to our proprietary analytics, the European energy and real estate sectors have experienced the highest level of downward revision to sales of all sectors on both a one- and three-month basis. The same is true for these sectors for downward EPS revisions, barring one exception for three-month healthcare EPS revisions.

Sales & EPS Estimate Revisions for Current Fiscal Year – % of Companies in Group with Positive Revisions:

Output has taken a major blow with mass outages and strikes at nuclear plants and LNG facilities across the continent. State intervention in domestic energy prices also continues to suppress both earnings and revenue. With a scorching CPI number out of the UK yesterday, there is very little hope for rates to come off from either of the major central banks across the Atlantic, a factor that has and could continue to suppress real estate.

These revisions have led to changes in earnings projections into next year. Below, I show the changes in sales and EPS estimates from one and three months ago.

Change in FY1 & FY2 Sales Estimates (%) for the Current Fiscal Year: