Key insights
- Barclays reports strong Q1 EPS growth in the US (16%) and Europe (4%). US FY26 EPS revisions are positive, driven by AI and tech, while European revisions remain slightly negative due to geopolitical concerns. Energy and semiconductor companies are seeing upgrades in both regions. Resilient global data is largely centered in the US, suggesting continued US equity outperformance.
Investing.com -- Barclays reported that first-quarter earnings per share growth is tracking at the highest levels in more than three years in Europe and over four years in the United States, according to the bank's analysis of the current earnings season.
Blended EPS growth is reflecting 27% in the US and 7% in Europe, which would mark the strongest performance since Q4 2021 and Q1 2023, respectively. With the majority of companies having reported, EPS growth is tracking at 4% in Europe and 16% in the US for firms that have announced results.
European companies have delivered earnings beats in line with expectations, though guidance has turned cautious due to impacts from ongoing conflict. Barclays' analysis of European company transcripts showed that approximately 75% of reported firms are experiencing some impact from the war through weaker demand, supply chain disruptions or higher input costs.
Full-year 2026 EPS revisions have turned positive in the US, driven primarily by artificial intelligence and technology sectors, widening the gap with European estimates. Energy and semiconductor companies have seen the biggest upgrades in both regions, pushing FY26 EPS growth estimates higher.
Within sectors, Financials, Materials and Consumer Discretionary have performed well on earnings beats, while Technology and Consumer Staples led in the US. Most other sectors have experienced small downgrades, with the majority of cuts concentrated in consumer segments including luxury goods, automotive and leisure.
Global EPS revisions have begun to stabilize as recent economic data and activity levels, such as global purchasing managers' indexes, have edged higher. However, the resilient data remains largely centered in the US, while European revisions continue to be slightly negative.