Worst Start To The European Earnings Season In A Decade
The global economy may be collapsing but at least companies are making out like bandits right? Wrong. While America is enjoying yet another above average earnings season when it comes to multinationals (and certainly not financials- those have had an abysmal earnings season), Europe, which has had a very lousy week despite the makeshift triage for the EUR which will last exactly a few months, as confirmed by both yesterday's PMIs and today's German Ifo survey, is on track to experience its worst earnings season in a decade! As Bank of America summarizes, of the 49 companies that have reported so far, 36.7% have beaten and a massive 53.1% have missed. And even more surprising is that the sectors which have outperformed in the US are precisely those that are doing the worst in Europe, specifically discretionary, industrials and staples. But such is life in a relative value fiat world. Surely, Europe's corporations are now lamenting the fact that its idiotic feudal lords will do anything in their power to keep the EUR artificially high for no other reason that to rub their vanity in that special place... ignoring that this experiment in vanity massage is now costing Germany tens if not hundreds of billions in almost guaranteed economic output loss. How long before Europe's corporatocracy screams 'enough' and starts demanding that the USD take its place as the most overvalued currency? Of course since all such complaints will end up in Trichet's inbox, we expect every such lament to be met with the usual broken parrot response: "the euro is a ‘Solid, Strong, Credible Currency."
From Bank of America:
The Q2 Reporting Season well under way with 49 companies reporting Q2 earnings so far. (approx 300 will report quarterly results in total)
Data so far suggests that we're off to a very poor start with 36.7% of companies positively surprising and 53.1% negatively surprising. This is well below historical averages of 55.4% and 37.7% respectively. 10.2% of companies have so far reported in-line numbers.
By sector, earnings beats are led by Technology (75.0%), Financials (71.4%) and Utilities (50.0%). Earnings misses are led by Discretionary (80.0%), Industrials (71.4%) and Staples (66.7%).
Notable beats & misses
On the stock front we've seen notable beats from Nokia Corp., Marine Harvest, Telenor, StoreBrand and Carnival.
Notable misses were Renewable Energy, Philips, Fortum, Castellum and Konecranes .
Notable EPS upgrades & downgrades
We've also seen notable upgrades of Suedzucker, Tele2, Getinge, StoreBrand and Orkla.
Notable downgrades were Husqvarna, Electrolux, Kuehne & Nagel, Outokumpu and Sandvik.