European companies are poised to experience profit growth during its second-quarter earnings season, according to S&P Capital IQ.
With an improved sentiment in Europe, the region’s corporations head into the season with positive earnings per share outlook, according to S&P Capital IQ’s consensus earnings reports for the second quarter.
“There appears to be a renewed anticipation of growth following a more stable outlook on interest rate changes from both the European Central Bank and the Bank of England,” the report says.
Tire manufacturer Pirelli & C. is the largest contributor to growth in the sector, according to S&P Capital IQ.
Telecom services, which had been mired in dreary fiscal expectations, now look to experience a 10%+ EPS growth. According to the report, this is likely a result of “the more relaxed regulatory environment that is expected to open the way for other large-scale mergers, post Telefonica’s takeover of E-Plus.”
Year-on-year EPS growth for companies in the S&P Europe 350 is estimated to climb 7.1%
While the overall picture appears clear, there are a few hazy spots in Europe. The report highlights three sectors likely to incur negative profit growth: Utilities, health care, and consumer staples. Utilities were singled out also because of the shift to renewables and lower wholesale power prices that have adversely impacted earnings.