Robust corporate earnings in Europe support bullish scenario for region's stocks

According to data reported by Bloomberg Intelligence, European companies across the majority of sectors increased sales and improved margins in the first quarter of this year. Overall earnings growth amounted to 5% year-on-year, beating the consensus forecast of a 1.5% decline.

Meanwhile, CEOs' statements in the reports were generally confident and focused on the outlook for trade deals. The strong performance and optimistic tone of the reports prompted a number of Wall Street strategists to raise their estimates for European stocks.

As Citigroup strategists noted, just a few weeks ago Europe saw a “recessionary” EPS revision amid elevated uncertainty. However, companies in the Stoxx 600 index showed surprisingly solid results for the first quarter.

Meanwhile, Goldman Sachs raised its estimates for EPS growth in Europe last week to 0% in 2025 from the previously expected decline of -7%. For 2026, the organization forecasts growth at 4%. The Goldman Sachs team based this revision on strong first-quarter earnings and an improving economic outlook. Additional favorable factors are fiscal stimulus in Germany and lower interest rates.