EPS growth estimates for Q4 2024 in Europe have been significantly reduced, now projecting a mere 2% as per Barclays (LON:BARC). This downgrade reflects widespread guidance cuts and sluggish economic activity in the region. In contrast, the U.S. forecasts remain more optimistic, projecting 8% growth.

Factors Influencing European EPS Growth

1. Slow Economic Activity:
   Weak economic conditions in the latter half of 2024 have restricted the performance of European equities.

2. Currency Fluctuations:
   The euro and pound depreciated significantly against the U.S. dollar in Q4, benefiting European exporters, though these effects are not yet fully incorporated into EPS forecasts.

3. Positive Recovery Signals:
   Global PMIs and favorable base effects from 2024 could pave the way for modest growth in 2025.

2025 EPS Growth Expectations

Barclays predicts a 4% increase in European earnings for 2025, slightly below the 7% consensus. This expectation is based on:

• Global nominal GDP growth of approximately 5%.
• Corporate margins stabilizing to support mid-single-digit EPS growth.

Risks to 2025 Projections

Despite some encouraging signals, several risks remain that could impact European earnings:

1. Weak Domestic Demand: Ongoing sluggishness in core European markets poses challenges.
2. Trade and China’s Economic Situation: Uncertainties surrounding global trade and recovery in China could hinder growth.
3. High Interest Rates: Continual high rates may pressure financing costs and profit margins.

APIs for Tracking Economic and Earnings Trends

1. Earnings Calendar API

Stay updated on corporate earnings releases to evaluate real-time performance.

2. Historical Earnings API

Analyze past earnings trends for better context regarding growth projections.

3. Sector Historical Overview API

Compare sector-specific performance across Europe to identify growth-driving industries.

Conclusion

While the Q4 earnings outlook appears cautious for Europe, improving economic factors and favorable currency dynamics may bolster support in 2025. Investors will closely monitor corporate earnings and economic indicators for stabilization signals, but risks such as weak domestic demand and high rates still linger.