Barclays Forecasts 13% Q2 EPS Growth Europe
Barclays' research note states that European companies entering the second‑quarter earnings season are expected to deliver earnings‑per‑share (EPS) growth of 13% year‑on‑year, compared with a 26% increase projected for United States firms. When the energy and technology sectors are excluded, consensus EPS forecasts for both Europe and the United States fall to roughly 5%, indicating that headline growth rates are being lifted by a limited number of industries.
The brokerage attributes the anticipated solid reporting season in Europe to stabilising oil prices, resilient economic activity and easing foreign‑exchange headwinds. It also observes that corporate pre‑announcements have been positive for a second consecutive quarter – the first such streak since 2021.
Barclays notes that Europe’s fiscal‑year‑2026 outlook has continued to improve, with earnings upgrades now extending beyond the energy sector into a broader set of industries. The bank projects FY2026 European EPS growth of 12%, which is below the consensus estimate of 17%, although Barclays has recently raised its own outlook as revisions have improved.
European equities have underperformed earnings growth this year, leaving valuations relatively attractive and providing a buffer against the risk of higher interest rates. The note advises investors to assess whether AI‑related winners can justify elevated valuations and identifies semiconductors, capital goods, banks, aerospace & defence, mining and energy as the sectors with the strongest earnings profiles. Energy is also highlighted as an attractive tactical hedge amid renewed U.S.–Iran tensions.