European blue-chip earnings growth set to hit four-year high, energy sector leads

European blue-chip companies remain on course to deliver their strongest quarterly earnings growth in four years, driven largely by a sharp increase in energy sector profits, analysts' estimates showed on Thursday, according to Reuters.

Companies listed on the benchmark STOXX 600 index are expected to report aggregate third-quarter earnings growth of 25%, based on LSEG's I/B/E/S data, Reuters reported. The estimates are based on results from 265 companies that have reported so far and forecasts for those yet to announce their earnings.

The energy sector is emerging as the biggest contributor to the earnings expansion, with profits expected to surge nearly 151%, the data showed. Excluding energy companies, earnings growth is projected at 10%, up from the previous week's estimate of 9.5%.


Third-quarter revenue across STOXX 600 companies is expected to increase 12%, while revenue growth excluding the energy sector is forecast at 7%, according to the LSEG data cited by Reuters.

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The earnings momentum is being supported by investments in artificial intelligence infrastructure, increased fiscal spending and consumer trends, UBS analysts said in a note on Thursday. The bank expects these drivers to sustain the growth trajectory into 2027.

European equities strengthened on Thursday, with the STOXX 600 hitting a record high as investors welcomed a strong third-quarter earnings season, declining energy prices and a shift away from AI-linked stocks in Asian and US markets, Reuters reported.

Among individual stocks, Siemens rose 1.7% after the industrial technology group raised its medium-term growth outlook. Staffing company Adecco surged 14.7% after reporting quarterly operating profit above market expectations.

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Investors will turn their attention to another batch of corporate results next week, with French train manufacturer Alstom among the nine STOXX 600 companies scheduled to report earnings.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)