“Investors are keeping a close eye on how inflation is affecting corporate profits”

Oct 21, 2021

Redacción Mapfre

Redacción Mapfre

The hunt for returns has now begun. Companies are getting ready for a new scenario, with experts predicting normalization of the figures being reported. Although it is clear that the basis for comparison will not be as favorable as in previous quarters, Cristina Benito, supervisor for equities at MAPFRE AM, expects that the news will continue to be positive. “The consensus among analysts is that there will be growth in earnings per share of close to 4.5% for the Euro Stoxx 50”, she says.

In relation to the most recent presentations for this year, corresponding to the third quarter, this expert manager from MAPFRE explains that “the focus will be on the impact inflation is having on corporate profits, and whether companies are able to pass on to their customers the increases being seen in their costs for energy, transportation, and raw materials, among others”. She thinks that the market will be especially interested in the growth forecasts companies will be announcing for the upcoming quarters, “which ultimately have a greater impact on stock prices than publication of actual results”.

In relation to this, a hunt for returns has now begun, where analysts will have higher expectations and where the market “will be more demanding with some of the industries that have shown better performance this year and where valuations are better adjusted, such as technology, cyclical consumer goods, and basic materials”.

Ultimately, in relation to equities this expert is anticipating positive performance by these assets during the rest of the year, especially European stocks, with this manager from the Group giving these “an especially high weight in the respective portfolios”. She also believes that “the rotation of industries that has already begun will continue, with better performance from those used for hedging against inflation, such as banking and energy, and with better performance by value stocks than growth stocks.

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