Earnings estimates need to be revised down
We have started to apply our probability approach to consensus earnings estimates. For Europe ex UK, we cover 45 industry groups as well as the index. There is still a 100% probability that consensus estimates for the index will be higher in 12 months’ time than they are now. But the average score for individual industry groups peaked in February and has started falling. There are eight industries where the probability of an increase is now less than 50%. More importantly, a downturn in the average industry score is normally a indicator that the index score is also about to decline.