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
According to the IMF’s Managing Director, strong international cooperation on coronavirus vaccine could speed up the world economic recovery and add $9 trillion to global income by 2025. A WHO trial found that Remdesivir, Hydroxychloroquine, Lopinavir and Interferon have little or no effect on hospitalized Covid-19 patients. Gilead Sciences has questioned the findings of the WHO study saying data appeared inconsistent.
INCORPORATING QUANT SIGNALS INTO EU EQUITY SECTOR/STYLE STRATEGY: MAINTAIN A TILT TO CYCLICALS AND VALUE
We present an update of our proprietary equity valuation tool, based on quant models. It provides indications of over- or undervaluation for different sectors and styles of European equities, which is further enriched by our qualitative analysis. Currently, among European equity sectors, financials, energy, telecoms, and autos look undervalued while Pharma, utilities and software appear overvalued.
CHINA’S RECOVERY CONTINUED BUT A BIT SOFTER THAN EXPECTED
China's economic recovery continued in Q3 2020, although a bit softer than expected. Real GDP growth rose to 4.9% yoy, slightly below the Reuters consensus expectation of 5.2% yoy, but still a substantial upturn from the 3.2% yoy in Q2. On a quarterly base, growth dynamics softened to 2.7% qoq, after 11.7% qoq and -10% qoq in the two previous quarters.