Energy lifts European earnings growth forecast to four-year high

Energy Boosts European Blue-Chip Earnings Forecasts to New Four-Year High

European Blue-Chip Earnings: Q3 Growth Driven by Energy Sector

Rising Earnings Estimates and Energy Sector Impact

Nov 5 (Reuters) - Estimates for European blue-chips' third-quarter earnings growth rose for a third consecutive week as the energy sector lifted forecasts, surpassing a strong second quarter to reach the highest level in four years, LSEG I/B/E/S data showed on Thursday.

Companies on Europe's benchmark STOXX 600 index are expected to report quarterly earnings growth of 25% in aggregate, up from 23.6% a week earlier, based on results from 212 companies and estimates for those yet to report.

Energy Sector Performance and Key Contributors

The energy sector is seen posting a 153.4% jump in profits, up from 139% a week earlier. Shell and TotalEnergies reported their highest quarterly profits since 2022 last week, helped by energy prices driven by the Iran war and record refining margins.

Excluding Energy: Broader Earnings and Revenue Trends

Excluding energy, earnings are expected to grow 9.5%, down from 9.8% a week earlier, while the revenue growth forecast slipped to 11.9% from 13.6% the previous week.

Sector-Specific Performance: Materials and Consumer Cyclicals

Basic materials companies have so far reported profits nearly 22% below analysts' estimates on aggregate, and consumer cyclicals 16% below, according to LSEG. The materials sector’s growth forecast has dropped to 10.1% from 37.9% a week earlier.

Broader Economic Drivers and Upcoming Earnings Reports

AI, Electrification, and Defence Spending

Europe's profit recovery is broadening as spending on AI, electrification and defence drives demand, and remaining "areas of softness" did not change the overall message, UBS Global Wealth Management's Matthew Gilman wrote in a note on Wednesday.

Key Companies to Watch Next Week

Next week, investors will be watching results from Siemens, Allianz and chipmaker Infineon, among 40 STOXX 600 companies due to report.

(Reporting by Rafal Nowak and Mirko Miorelli in GdanskAdditional reporting by Javi West Larrañaga; Editing by Tasim Zahid)