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Europe firms set to see earnings rise
Source: Bloomberg News |
November 22, 2011, Tuesday
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Print Edition
Print Edition
AS Europe's debt crisis raises the risk of a recession, companies in the region show no signs of slowing with earnings growth poised to top their United States rivals.
Net income for companies in the Stoxx Europe 600 Index will rise by 10.5 percent in 2012 after increasing 11 percent this year, led by carmakers such as Porsche SE and retailers, including Burberry Group Plc, according to more than 12,000 analyst estimates compiled by Bloomberg News. The gauge is headed for four straight years of income growth exceeding 10 percent, the longest streak since 1998, data show.
Bulls say the 16 percent tumble in European stocks since December has created bargains because profit growth will exceed the 10.1 percent estimated for US companies, even though the economy in the 17-nation eurozone is expanding at one-third the pace, according to economists surveyed by Bloomberg News. Bears have no confidence in the earnings forecasts when sovereign borrowing costs are reaching records on concern Greece may default.
"Companies are in a lot healthier position going into a downturn than in 2008," said Luke Stellini, who helps oversee US$636 billion at Invesco Ltd in Henley-on-Thames, England.
"The debate is how north the recession in Europe may spread, but I'd argue that equity valuations take account of most scenarios already."
International demand will help push net income up more than 10 percent next year at mining companies, retailers and builders, analysts said. As much as 54 percent of sales in the Stoxx 600 comes from outside Europe, according to data compiled by Royal Bank of Scotland Group Plc. Earnings in the Stoxx Banks Index may gain 23 percent in 2012, the data show.
Net income for companies in the Stoxx Europe 600 Index will rise by 10.5 percent in 2012 after increasing 11 percent this year, led by carmakers such as Porsche SE and retailers, including Burberry Group Plc, according to more than 12,000 analyst estimates compiled by Bloomberg News. The gauge is headed for four straight years of income growth exceeding 10 percent, the longest streak since 1998, data show.
Bulls say the 16 percent tumble in European stocks since December has created bargains because profit growth will exceed the 10.1 percent estimated for US companies, even though the economy in the 17-nation eurozone is expanding at one-third the pace, according to economists surveyed by Bloomberg News. Bears have no confidence in the earnings forecasts when sovereign borrowing costs are reaching records on concern Greece may default.
"Companies are in a lot healthier position going into a downturn than in 2008," said Luke Stellini, who helps oversee US$636 billion at Invesco Ltd in Henley-on-Thames, England.
"The debate is how north the recession in Europe may spread, but I'd argue that equity valuations take account of most scenarios already."
International demand will help push net income up more than 10 percent next year at mining companies, retailers and builders, analysts said. As much as 54 percent of sales in the Stoxx 600 comes from outside Europe, according to data compiled by Royal Bank of Scotland Group Plc. Earnings in the Stoxx Banks Index may gain 23 percent in 2012, the data show.
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