Article / 04 May 2015 at 9:30 GMT

Earnings Watch: Good earnings season on both sides of the Atlantic

Head of Equity Strategy / Saxo Bank
Denmark
  • Overall satisfactory results in both US and Europe
  • Energy a positive surprise in the US
  • Techs exceed expectations in Europe
By Peter Garnry

The earnings season across on sides of the Atlantic is well underway and this week another 207 companies in the S&P 1200 Global Index are reporting earnings.

This week's most important earnings releases are...

Monday: Comcast, EOG, Anadarko.

Tuesday: ANZ, Itau, UBS, Adidas, Infineon Technologies, Metro, Deutsche Lufthansa, HSBC, Walt Disney, DIRECTV, Mylan.

Wednesday: Anheuser-Busch, Ambev, Endridge, BMW, Societe Generale, Credit Agricole, GlaxoSmithKline, Imperial Tobacco, 21st Century Fox, Occidental, MetLife. 

Thursday: National Australia Bank, Canadian Natural Resources, Zurich Insurance, Siemens, Continental, Henkel, BT Group, Enel, Keyence, ING, Priceline, Regeneron Pharmaceuticals.

Friday: Ecopetrol, BG Group, Toyota, Mitsubishi.

For equity markets the biggest impact this week will come from the European financials such as HSBC, UBS, Societe Generale and Credit Agricole. However, earnings from BMW will also spark headlines due to its large exposure to China and sensitivity to the lower EUR. Siemens will also take center stage as the industrial behemoth continues to execute its turnaround to simplify its businesses.

US energy sector defies low oil price

Around 70% of all companies in the S&P 500 have now reported earnings and we now have enough evidence to draw some conclusions. Overall, the US earnings season has been better than was feared some weeks ago.

Sales are 0.6% better than estimated and earnings an impressive 6% better than expected. Across sectors, energy stands out with 12.2% beat on revenue and a 26.6% beat on earnings. 

Surprisingly, the weakest sector has been consumer discretionary with a -2.5% miss on sales and only a 0.3% beat on earnings. Given the level of global economic activity, low oil prices and improving labour markets we would have expected cyclical consumer industries to have performed better.

Going a layer deeper into industry groups, the automobiles & components group has seen the worst performance with a -6% miss on sales and earnings in line with estimates. The strongest industry groups have been energy and then pharmaceuticals & biotechnology.

European technology gets tailwind from lower EUR

While US energy companies have surprised massively against low expectations their European counterparts have not done as well. The European energy sector has had a -5.4% miss on sales but a 21.3% beat on earnings.

The sector that has surprised the most both on the top and bottom line is technology with a 3.8% beat on sales and 3.3% beat on earnings with the result being driven by the lower euro.

The aggregate European earnings season has been good against elevated expectations with a 1.3% sales beat and a 2% earnings beat.

BMW
 China-sensitive BMW will report on Wednesday. Photo: iStock

– Edited by Clare MacCarthy

Peter Garnry is head of equity strategy at Saxo Bank
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Earnings Watch - 2015-04-05

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