European stock markets: Q3 financial report preview
2023-10-10
Before the official release of the third-quarter financial reports of major European companies, let's sort out market expectations. According to data from the London Stock Exchange Group (LSEG) as of the 3rd, 342 companies belonging to the STOXX Europe 600 index plan to release sales for the third quarter (July-September period), which is expected to decrease by 7.9% compared to the same period last year, continuing the downward trend of the second quarter (June, a year-on-year decrease of 6.0%). Out of all ten departments, six, including energy (down 26.6%), real estate (down 19.5%), and raw materials (down 14.9%), are expected to experience a decline in sales, while four, including the finance department (up 6.4%), is expected to achieve growth. Even after excluding the decline in the energy sector, overall sales are expected to decline by 2.1%, indicating poor overall performance.
In addition, 316 companies plan to release third-quarter earnings per share (EPS) data, which is expected to decrease by 11.4% compared to the same period last year. Since early July (a year-on-year decrease of 6.6%), it has been continuously declining. Compared to the second quarter (a year-on-year decrease of 5.9%), this trend is still continuing. Among these companies, except for finance (up 21.1%) and general consumer goods (up 7.8%), the profits of the other eight departments are expected to decline, with raw materials (down 49.2%), energy (down 47.9%), and capital goods (down 10.6%) becoming a drag. It should be pointed out that after excluding the decline in the energy sector, it is expected to achieve a growth rate of 1.6%.
The predicted price-to-earnings ratio (PER) of the STOXX Europe 600 index in the next year is 11.7 times, a decrease from the stable level of 12 times Taiwan at the beginning of this year, and it is in the undervalued field. If the expectation of the European Central Bank (ECB) stopping interest rate hikes increases, the sense of undervaluation may be corrected, which could potentially drive the stock market up. However, the STOXX Europe 600 Index's projected earnings per share growth rate for the next year is 5.1%. Although it has rebounded from the level of 1.3% in December last year, the pace of improvement is still relatively slow, and the expected growth rate is lower than the levels of the United States (S&P500, 9.8%) and Japan (TOPIX, 10.1%). Unless the economic recovery momentum within Europe and China strengthens and the performance prospects of European companies improve, the upward momentum of European stock markets may be weak.
In addition, 316 companies plan to release third-quarter earnings per share (EPS) data, which is expected to decrease by 11.4% compared to the same period last year. Since early July (a year-on-year decrease of 6.6%), it has been continuously declining. Compared to the second quarter (a year-on-year decrease of 5.9%), this trend is still continuing. Among these companies, except for finance (up 21.1%) and general consumer goods (up 7.8%), the profits of the other eight departments are expected to decline, with raw materials (down 49.2%), energy (down 47.9%), and capital goods (down 10.6%) becoming a drag. It should be pointed out that after excluding the decline in the energy sector, it is expected to achieve a growth rate of 1.6%.
The predicted price-to-earnings ratio (PER) of the STOXX Europe 600 index in the next year is 11.7 times, a decrease from the stable level of 12 times Taiwan at the beginning of this year, and it is in the undervalued field. If the expectation of the European Central Bank (ECB) stopping interest rate hikes increases, the sense of undervaluation may be corrected, which could potentially drive the stock market up. However, the STOXX Europe 600 Index's projected earnings per share growth rate for the next year is 5.1%. Although it has rebounded from the level of 1.3% in December last year, the pace of improvement is still relatively slow, and the expected growth rate is lower than the levels of the United States (S&P500, 9.8%) and Japan (TOPIX, 10.1%). Unless the economic recovery momentum within Europe and China strengthens and the performance prospects of European companies improve, the upward momentum of European stock markets may be weak.