Q3 earnings season provides reassuring results.

Q3 earnings season is almost finished showing decent results which eveen improved since our last October’s update. At the index level, around 80% of US companies have beaten analysts’ exppectations for earnings and sales.

Highlights:
  • Q3 earnings season is almost finished showing decent results which eveen improved since our last October’s update.
  • At the index level, around 80% of US companies have beaten analysts’ exppectations for earnings and sales.
  • The earnings growth increased in Q3 vs Q2 both in Europe and in the EA
  • In the US, the earnings guidance improved and is above norm. The US cappex increased in Q3 vs Q2 but capex intentions remain subdued at a cyclical low.
  • After having being cut, Q4 expectations are not so exuberant anymore. Thaat said, 2020 estimates remain too bullish (growth of 10% vs our estimate of 3-to-4%) with risks of further negative revisions going forward.
  • The most export-oriented EM countries (Korean, Taiwan) show negative yyearly earnings growth. Indian companies are turning around and have significantly beaten analystts’ expectations.
  •  
Download the full publication below.
Q3 EARNINGS SEASON PROVIDES REASSURING RESULTS.

RELATED INSIGHTS

COVID-19 FACTS & FIGURES
US President-elect Joe Biden has unveiled a $1.9 trillion stimulus package proposal. Following the recent increase in cases, China has imposed new restrictions and lockdowns in the Hebei province. Canada has implemented new restrictions and a provincewide curfew in Quebec that will last until February 8. German Chancellor Angela Merkel warned that the recent rise in Covid-19 cases could force the country to prolong the nationwide lockdown until April.
EQUITIES: STAY POSITIVE WITH A VALUE-CYCLICAL TILT
Following a monster rally in stocks last autumn, multiples are well above historical averages, but equity investors can count on lingering low yields, tighter credit spreads and increasing central banks’ balance sheets which in turn maintain low the cost of equity and the discount rate of future cash flows.
Video Outlook 2021: Repair and Despair
Watch the Outlook video with Vincent Chaigneau, Head of Research at Generali Investments