US and European Q2 Earnings Handily Beat Forecasts, JPMorgan Reports

Second-quarter corporate earnings in both the U.S. and Europe are handily beating analyst expectations, fueled by robust double-digit growth, according to a research note from JPMorgan. With roughly a quarter of companies having reported, year-over-year earnings growth has reached 23% in the U.S. and 22% in Europe.

U.S. Companies Post Widespread Beats

The U.S. has seen a particularly strong start to the earnings season. Of the S&P 500 companies that have reported results, 87% have surpassed consensus earnings per share (EPS) estimates.

This performance is driven by significant growth, with key figures including:

• EPS Growth: +23% year-over-year, representing a positive surprise of 13 percentage points.
• Revenue Growth: +11% year-over-year, which is 3 percentage points ahead of projections.

According to the JPMorgan report, the strength is broad-based, with nine sectors recording double-digit EPS growth.

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Energy Sector Powers European Results

In Europe, earnings have also been solid, with 55% of reporting Stoxx 600 companies beating EPS forecasts. The 22% year-over-year EPS growth represents a positive surprise of 2%.

JPMorgan analysts highlighted the outsized contribution of the energy sector, which has been aided by higher energy prices. When the energy sector is excluded, European EPS growth stands at a more moderate, yet still strong, 9% year-over-year. All sectors in the region are reportedly seeing positive earnings growth except for real estate.

Analyst Outlook

The strong start to the reporting season is consistent with JPMorgan's previously outlined bullish outlook for the second quarter and the second half of the year. The robust corporate profitability suggests underlying fundamental strength in both markets, which could provide a supportive backdrop for equities if the trend continues.