Europe Inc heads for second-best earnings season since 2022

European blue-chips are set to deliver their ​second-best quarterly earnings in four years, ​an LSEG I/B/E/S report showed ‌on Thursday, ​buoyed by energy companies reporting stellar profit growth. Companies on Europe's benchmark STOXX 600 index are expected to report ‌quarterly earnings growth of 23.6% on average, according to the LSEG data based on results from 144 companies and market estimates for those that are yet to report.

That is ‌just a notch under the previous quarter's 23.9% increase. Most of that growth is ‌due to the energy sector's big profit jump, with the LSEG report showing earnings rising 139% compared with the previous year thanks to energy prices driven higher by the Iran war, and record ⁠refining ​margins.

Still, excluding the ⁠energy sector, the rest of the companies in the STOXX 600 index are expected to post ⁠a 9.8% growth in third-quarter earnings, on aggregate, which is above the average of 7.1% over ​the previous 16 quarters. The third-quarter revenue outlook for European blue-chip companies has also ⁠improved and is now seen growing at 13.6% from a year ago, which would mark the ⁠best ​showing since the third quarter of 2022.

According to the report, 8 out of 10 sectors are expected to post profit growth in the quarter, while real ⁠estate firms and consumer cyclicals - auto, retail and entertainment companies - are seen delivering shrinking earnings. Earlier ⁠on Thursday, the ⁠STOXX 600 index touched over one-month highs as a slew of strong earnings reports lifted sentiment, with defence and energy companies ‌among the ‌top gainers.