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Looking for upside in Europe

Consumer discretionary, consumer staples and telcos have the best prospects as profit margins recover in that part of the world

The big difference in profit margins between the euro area and the US - 4% versus over 9% - explains much of the current earnings gap, with EPS at 30% below trend in Europe and 10% above trend in the US.

AT 4 PER CENT, profit margins in the euro area are still close to levels consistent with recession, but they stand at historical highs of above 9 per cent in the US. This big difference explains much of the earnings gap, with earnings per share (EPS) currently 30 per cent below trend in the euro...

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