Asset Allocation Strategy
The Global Revival in Corporate Earnings Continues
Mon 15th November, 2021

While there has been an understandable focus on the outlook for inflation and interest rates in recent months, earnings are a key blank in the global equity outlook.

The latest batch of earnings results in the US and Europe confirms that the global earnings cycle continues to be strong, with operating leverage (and pricing power) still more than compensating for the widely canvassed pick-up in cost pressures.

The US third-quarter reporting season is now well over 90% complete, with actual earnings soundly beating expectations yet again. Over the past month, Q3 actual earnings growth has been upgraded from 27% to 39% year-on-year (YoY) growth.

Analysts currently expect earnings growth of just over 20% for Q4 (this is too low in our view), which translates to earnings growth of more than 40% for the full year CY21.

Growth is then expected to moderate significantly in CY22 as year-over-year comparisons become more challenging.

While the US earnings season has captured the bulk of the attention, UK/European earnings remain something of an undiscovered story in our view. European earnings continue a powerful revival with ongoing upgrades. European earnings have been in upgrade mode now for 14 months. This places the current upgrade cycle just behind a record 15 month run in 2003/04. In this week’s report ex cover:

  • The long upgrade cycle has further to run
  • The earnings bull market should continue into 2022
  • US valuations - interest rate vulnerability but earnings cycle remains supportive
  • European earnings also staging a dramatic revival
  • Consensus earnings growth for 2022 looks too low

About Wilsons: Wilsons is a financial advisory firm focused on delivering strategic and investment advice for people with ambition – whether they be a private investor, corporate, fund manager or global institution. Its client-first, whole of firm approach allows Wilsons to partner with clients for the long-term and provide the wide range of financial and advisory services they may require throughout their financial future. Wilsons is staff-owned and has offices across Australia.

Disclaimer: This communication has been prepared by Wilsons Advisory and Stockbroking Limited (ACN 010 529 665; AFSL 238375) and/or Wilsons Corporate Finance Limited (ACN 057 547 323; AFSL 238383) (collectively “Wilsons”). It is being supplied to you solely for your information and no action should be taken on the basis of or in reliance on this communication. To the extent that any information prepared by Wilsons contains a financial product advice, it is general advice only and has been prepared by Wilsons without reference to your objectives, financial situation or needs. You should consider the appropriateness of the advice in light of your own objectives, financial situation and needs before following or relying on the advice. You should also obtain a copy of, and consider, any relevant disclosure document before making any decision to acquire or dispose of a financial product. Wilsons’ Financial Services Guide is available at

All investments carry risk. Different investment strategies can carry different levels of risk, depending on the assets that make up that strategy. The value of investments and the level of returns will vary. Future returns may differ from past returns and past performance is not a reliable guide to future performance. On that basis, any advice should not be relied on to make any investment decisions without first consulting with your financial adviser. If you do not currently have an adviser, please contact us and we would be happy to connect you with a Wilsons representative.

To the extent that any specific documents or products are referred to, please also ensure that you obtain the relevant disclosure documents such as Product Disclosure Statement(s), Prospectus(es) and Investment Program(s) before considering any related investments.

Wilsons and their associates may have received and may continue to receive fees from any company or companies referred to in this communication (the “Companies”) in relation to corporate advisory, underwriting or other professional investment services. Please see relevant Wilsons’ disclosures at

  • Share This Article

Written by

David Cassidy , Head of Investment Strategy

David is one of Australia’s leading investment strategists.

Related articles