Article / 24 April 2015 at 13:46 GMT

Earnings Watch: European bank earnings on tap

Head of Equity Strategy / Saxo Bank
By Peter Garnry

The US earnings season is already well underway with 195 companies in the S&P 500 having reported Q1 earnings. In Europe, earnings releases will pick up next week with a lot of the major banks reporting. As we have been saying for a while the valuations of European equities have been pushed to levels that discount acceleration in earnings, so Q1 earnings have to reflect the tailwind from the lower euro and oil price. If not in the Q1 numbers then at a minimum in the outlook for Q2 and onwards.

Next week's most important earnings releases are:

Monday: PetroChina, GDF Suez, FANUC, Canon, DBS Group, Apple

Tuesday: China Life, Daimler, Banco Santander, Total, BP, NTT Docomo, Honda Motor, Atlas Copco, Pfizer, Merck, Bristol-Myers, UPS, Ford Motor

Wednesday: Banco Bradesco, Suncor Energy, ABB, ICBC, China Construction Bank, Volkswagen, Deutsche Bank, BBVA, Iberdrola, Barclays, Eni, Nordea Bank, MasterCard, Time Warner, Valeant Pharmaceuticals, Mondelez

Thursday: Vale, China Petroleum & Chemical, Bayer, BASF, Novo Nordisk, Danske Bank, Sanofi, Nokia, BNP Paribas, Airbus, RBS, Shire, Sony

Quick top down view on US earnings

The US earnings have been better than expected. We were in camp that analysts had not taken down their estimates enough discounting the negative effects of the stronger USD and lower oil price.

However, the aggregate data so far show that sales have come in 1.1% lower than expected, basically in line, and EPS has surprised by 5.7% against expectations (partly driven by share buybacks).

Few companies have surprised on the top line but the list below shows the top 20 on sales surprise. The winner so far has been Goldman Sachs which beat sales expectations by 14% The surprising companies are the top 2-4, all oil & gas companies, that have managed to come ahead of expectations despite the falling oil price.

Top 20 on sales surprise
Source: Saxo Bank, Bloomberg

The table below shows the Q1 earnings season breakdown on industry groups. Two worst performing industry groups on sales expectations are so far Automobiles & Components and Utilities. On earnings surprise the two best performing industry groups are Food & Staples Retailing and Real Estate.

Q1 earnings across industry groups
Source: Saxo Bank, Bloomberg 

– Edited by Clare MacCarthy

Peter Garnry is head of equity strategy at Saxo Bank
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Earnings Watch 2015-04-20


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