The quarterly reporting season begins: what to expect

THE’start of the quarterly season in the United States by the banking giants bodes well for the corporate results of other sectors and in other geographies, even if we must be aware that the profits of the financial groups on Wall Street were driven by the liveliness of the markets at the end of 2024 and that the analysts expect very different performances on the two sides of the Atlantic Ocean.

The fourth quarter 2024 earnings season began last week and between now and mid-February, approximately 85% of STOXX 600 by market cap it will have reported a much longer period of results than the previous ones USAwhere this ends towards the end of January.

Analysts’ expectations

According to consensus estimates cited by Generali Asset Management, the United States should continue to have positive earnings growth also for the fourth quarter (approximately +8%), thanks to an economy that still remains solid. The situation is different in Europe where political uncertainties and lower economic growth should manifest themselves in a contraction in the profits of European companies in the last quarter of 2024 (approximately -1.3%).

The most anticipated European sectors

The data, revised downwards for Europe, should lead to a modest 1.6% earnings growth for the Stoxx 600, says Chiara Robba, Head of LDI Equity at Generali Asset Management. Expectations for the Luxury and Auto sectors in particular have continued to be revised downwards mainly due to the negativity around potential tariffs from the new Trump administration and a China that is struggling to show signs of substantial recovery. However, this strong market negativity on the Luxury was contradicted by the numbers reported by Richemont, which far beat estimates thanks to a more resilient than expected American consumer.

Now we have to ask ourselves whether the sector too carwhich trades at multiples of 0.5x P/B and has a similar level of shorts to the luxury sector, may surprise positively in this reporting. Another sector to monitor will be that of Industrialwhich could surprise positively thanks to the positive effect on exports of the depreciation of the euro from November, as well as a possible increase in orders before customs tariffs.

Forecasts for the USA

As for the US market, thanks to the solid macroeconomic data released in December, earnings revisions were positive for the fourth quarter and the market expects earnings growth of 9.9% for 2024, which is expected to be the strongest year strong from 2021, Robba points out. The Magnificent 7 (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla), already in the spotlight at the beginning of 2024, should close the year with +36% change in earnings per share, far outperforming the rest of the 493 companies in the S&P500 at only +3.7%. Meanwhile, expectations were beaten by the main US banks which reported better than expected overall. There will be great anticipation for the Techwhose growth profile should be more contained in 2025, although still growing by 20% vs the rest of the S&P which should instead accelerate to +12.3%

In terms of quarterly expectations for 2025, a certain acceleration expected in 4Q25 for theS&P while, according to analysts, the first quarter in Europe will show the best growth (+23% EPS), also thanks to a simpler comparison base effect (1Q24 at -8%).