HSBC: European Earnings Outlook Improves
In a recent note, HSBC analysts highlighted an encouraging shift in the consensus European earnings per share (EPS) growth outlook for the first quarter of 2024. Despite remaining negative, the outlook has shown signs of improvement, indicating positive developments in the European market.
Positive Trends in Q1 2024 Results:
As the first quarter of 2024 progresses, HSBC notes a notable increase in EPS beats and surprises compared to the previous quarter. Approximately 50% of companies in the FTSE Europe have already reported their Q1 2024 numbers, demonstrating a significant rise in EPS beats to 56.5%, up from the multi-year low of 46% recorded in Q4 2023.
Key Drivers of Improved Performance:
HSBC identifies telecoms, financials, and basic materials as the primary drivers behind the strong EPS surprise margin. The spike in commodity prices particularly catches analysts by surprise, contributing to the overall positive momentum.
Slow but steady improvement:
While acknowledging the gradual nature of the improvement, HSBC points out that the consensus EPS growth outlook for 2024 is on an upward trajectory. The EPS growth estimate for 2024 has increased from 4.9% in mid-April to 5.1% currently. Additionally, the 2024 EPS momentum has surpassed the threshold level of 50%, indicating a positive trend in earnings growth.
