Source: Bloomberg
Goldman Sachs strategists highlighted that the companies in European equity benchmark have seen more upward revisions that those in the US market. That creates underperformance of European stock market relative to the US peers.
As the next chart shows, the average Earning per Share in the US market has outperformed one of the EU equity market. The main driver is profits of big tech stocks: Microsoft, Apple, Google, Facebook, Netflix showed impressive results. All of these names are growing ones. We can say that the US market is more about Growth while the EU market is more about Value. Today investors definitely prefer growth. This is the nature of EU underperformance. The situation can change; history shows, though, that it can happen along with a correction in Growth. While Growth matters more the underperformance of European stocks will probably remain.
Source: Bloomberg
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