July 12, 2020

Europe Emerges As Leader Of Foreign Stocks’ Q1 Earnings


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MAP_130510.pngBy Juan Carlos Arancibia, Investor’s Business Daily

As first-quarter results season starts to wind down, European companies are emerging as the strongest earnings performers.

Excluding tax havens such as Bermuda and the Cayman Islands, European firms account for 31 of the 50 best earnings-per-share gains that foreign companies posted the past few weeks.

That’s a bit of a surprise, given the region’s economic woes

European companies also are prominent when looking at those with the best earnings surprises, although the biggest winners in that regard include some Israel- and China-based companies.

For example, Israel’s SodaStream International (SODA) beat views by more than 20%. Ctrip.com (CTRP) shares soared out of a base Thursday after the China-based travel booking firm soundly beat estimates.

IBD looked at more than 130 foreign-based companies in its proprietary database, leaving out thinly traded, low-priced stocks. Of those with available estimates, 58% beat views, while 37% have missed. That compares with 67.8% beating and 32.2% missing EPS views in the S&P 500, according to Nick Gibbons, senior analyst at Gradient Analytics.

Technology companies, including several firms in the Netherlands, have seen some of the most robust profit increases.

NXP Semiconductors (NXPI) on April 22 reported a 213% earnings surge, which was also one of Q1’s best earnings surprises (47% better than consensus) among foreign stocks. That kept pace with the chipmaker’s 107% EPS jump in the fourth quarter, part of a quick turnaround in its financial results. NXP’s chips are used in smartphones, cars, laptops and factories.

AVG Technologies (AVG), a Dutch anti-virus software company, posted a 71% profit advance for Q1. Its results add up to improvement after EPS gains of 115% and 52% the prior two periods.

It’s not purely a tech stock, but Vistaprint (VPRT) beat expectations by 33% when it reported a 66% quarterly EPS gain April 25. The printing service company has operations in the U.S. and several other countries. In 2009, it changed its domicile from Bermuda to the Netherlands, the site of its first manufacturing facility.

The health care sector also figures in the top tier of Q1 results. Ireland-based Icon (ICLR), a clinical research service provider, continued a fast turnaround when it notched a 140% earnings surge April 25.

However, Ireland-headquartered Jazz Pharmaceuticals (JAZZ) and Spain’s Grifols (GRFS) sold off recently despite big profit gains.

After medicine and technology, only financials have a meaningful concentration in the top 50 earnings. They includes HSBC Holdings (HBC) and Grupo Financiero Santander Mexico (BSMX).

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