J.P. Morgan: European and US third-quarter earnings beat expectations: Europe leads on growth, but fewer companies beat forecasts

Why is Europe temporarily ahead of the US in earnings growth?

As of 30 October, 55% and 49% of the S&P 500 and STOXX 600 companies tracked by JPMorgan that were due to report had announced third-quarter results, respectively. Among reporting companies, aggregate earnings per share rose 34% year on year in Europe and 19% in the US.
Europe’s energy sector was the biggest driver: excluding energy, aggregate earnings per share growth among reporting STOXX 600 companies fell to 17%; nevertheless, 8 of the remaining 10 sectors still posted double-digit earnings growth.
Europe also temporarily leads on median company earnings growth: the STOXX 600 recorded year-on-year growth of 13%, versus 10% for the S&P 500, both above consensus expectations before the reporting season began.

Among S&P 500 companies that have reported, 81% posted earnings per share above expectations; aggregate earnings growth was 3 percentage points above expectations. The corresponding proportion for the STOXX 600 was 56%, and aggregate earnings growth was 13 percentage points above expectations.
However, the shares of companies beating earnings and revenue expectations fell from the previous quarter in both Europe and the US. The share of US companies beating revenue expectations was also below its historical median, showing that the size of the aggregate beat and how widespread beats are among companies are two distinct measures.
The estimate for the S&P 500’s aggregate third-quarter earnings per share was revised up from a January low of 81.4 dollars to 90.6 dollars; this occurred alongside a decline in the share of companies beating expectations this quarter.

Among S&P 500 companies that have reported, 7 of 11 sectors posted double-digit earnings-per-share growth. Information technology contributed the most to overall earnings growth, followed by industrials.
Aggregate revenue among US companies that have reported rose 11% year on year, 2% above expectations; every sector posted positive revenue growth. JPMorgan believes relatively resilient economic activity supported earnings growth that exceeded consensus expectations.
Aggregate revenue among European companies that have reported rose 14% year on year, 1% above expectations; JPMorgan noted that a weaker euro helped Europe outperform the US in revenue surprises.

Only 18% of companies in the TOPIX Prime Composite Index that were due to report had announced results for the second quarter of the fiscal year ending in March 2027. Revenue among reporting companies rose 14% year on year, while aggregate net profit fell 3%; 45% of companies beat earnings expectations.
Sector performance diverged: earnings rose in 12 of the 16 sectors that had reported, but fell 19% year on year in automobiles and transportation equipment, 16% in retail, and 153% in electric power and gas.