The mystery that is European earnings

Marcus Morris-Eyton, in Allianz's European equities team, looks at the outlook for earnings in Europe, following six years of non-growth.

European earnings have not grown for six years, despite the European market having rallied by circa 50% over that time period. In each of the previous five years, beginning of the year consensus estimates, have ended up seeing double-digit downgrades over the course of the year, and unfortunately 2016 looks like it will be no different. Does this matter? The simple answer is that for active managers, the earnings of the wider market are not as important as many believe. The negative earnings picture of the past few years, has often been distorted by the capitulation in one or two spec...