Earnings Season Monitor - A Standout Season

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July 31, 2026 04:58 PM GMT

European Equity Strategy | Europe

Morgan Stanley & Co. International plc+

Regiane Yamanari

Equity Strategist

Earnings Season Monitor - A

Standout Season

Marina Zavolock

Equity Strategist

Leoni Externest, CFA

Equity Strategist

With c. 76% of market cap having reported, Europe is on track

for the strongest earnings season in years. Net weighted skew to

beats stands at +45% & to guidance raises +23%, up markedly

from both last week & prior quarters. Semis, Transport, Div Fins

& Aerospace lead on beats & guidance, and the vast majority of

sectors are showing positive revisions.

Morgan Stanley India Company Private Limited+

Jitiksha Shah

Equity Strategist

Karthik Nityanand

Strategist

Morgan Stanley & Co. International plc+

Emily A Woods

Key Takeaways

Equity Strategist

Skew to beats and guidance upgrades accelerate vs our 1st take. Our analysts'

reaction to earnings data shows a +45% net weighted skew to beats (vs +31% a

week ago & +26% in 1Q) & +23% to NTM EPS consensus upgrades post results

(vs +10% & +6%).

At the sector level, Semis, Transport, Div Fins & Aerospace are leading the net

skew to beats and positive guidance. Food Retail, P&P and Media on the negative

side (Exhibits 7 and 8 ).

Europe's positive skew to beats and guidance still lags US, but gap has narrowed

further vs last week & sits at the narrowest gap since our systematic earnings

tracking began, in particular on a free float market cap weighted basis.

Price reaction has been negatively skewed for meaningful surprises (-7% for

misses, +3.4% for beats), and even more asymmetric when surprises have been

modest (-5% vs +0.2%).

Lists based on management sentiment score change inside (Exhibits 37 and 38 ) showing strong post results performance, particularly on the negative screen.

With European consensus EPS growth for 2026 now at 17.2%, we are getting many

questions on how European earnings growth has managed come out so strong

despite higher energy prices and local economic indicators. See our recent note for an

in-depth explanation into market misperceptions on European earnings: European

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