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What Does The Global Growth Outlook Look Like Excluding Energy?

We believe energy sector results are masking an overall global trend toward corporate profit growth in 2015. Excluding energy, seven of the nine regions we cover in Equity Market Pulse are estimated to show improved earnings per share (EPS) growth in 2015 vs. 2014 (regions with improved growth estimates for 2015 are highlighted). Including energy, only six regions are expected to show improved EPS growth in 2015. Note that S&P 1500 estimated EPS growth excluding energy is 6.3%, vs. 0% growth if energy is included.

Global Earnings and Sales Growth Forecasts Excluding Energy

Note: All regions exclude energy sector stocks. Results for the UK also exclude materials stocks.

Europe has the strongest estimated 2015 EPS growth, excluding energy. The table below lists Europe’s five largest economies by GDP. Note that all but the UK have double-digit estimated 2015 EPS growth.

Europe Earnings and Sales Growth Forecasts

Note: All regions exclude energy sector stocks. Results for the UK also exclude materials stocks.

We also note that valuations in Europe, particularly for Europe’s largest economies, are not far above their analyst-projected growth rates. Germany sells at an estimated P/E to growth rate of 1.2X, while France sells at a P/E to growth rate of 1.3X. By comparison, the U.S. sells at a P/E to growth rate of 1.6X.

For more information on global growth, valuations, operating performance, and market performance, see the latest issue of Equity Market Pulse.

Developed Europe Valutions CY 2015

Source: S&P Capital IQ Estimates and S&P Quantamental Research. Data as of June 5, 2015.

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