After four straight days of losses, European stocks have finally turned around and are headed up on the backs of companies such as Bayerische Motoren Werke AG (ETR: BMW) reported earnings that beat out expectations for its quarterly earnings. However, United States stocks and Asian stocks dropped.

Shares of BMW increased 1.1% after the German auto company posted its highest profit margin since the year 2011 at its automobile unit.

Other European companies gained as well. Credit Agricole SA rose 3.4% after attributing their improved quarter to a key solvency measure. Deutsche Post AG increased 3.3% as well after releasing their own earnings report that did better than analysts’ expectations. Telefonica SA dropped by 1% after it announced that it offered 6.7 billion euros (or roughly $9 billion) for one of Vivandi SA’s divisions.

In London, the Stoxx Europe 600 Index increased by 0.4%, to 332.51 in the early afternoon local time. Just last week, the index fell 2.9% following the news of companies such as ArcelorMittal and Holcim Ltd. disclosed results that did not meet expectations. Yesterday, on Monday August 4^th, the index closed at its lowest level since April 16^th.

The Standard & Poor 500 Index’s futures dropped 0.4% early today, following the rebound by the equity gauge yesterday, which bounced back from its largest weekly loss in the past two years.

The MSCI Pacific Index fell 0.7%.

Pierre Mouton, a staff member at Notz, Stucki, &Cie. in Geneva who manages $8 billion at the firm, commented on the tough market situation in the United States last week. He states that after last week’s stock market disaster, it is good that the markets are improving bit by bit and bouncing back.

On the other hand, European earnings have yielded mixed results. In the case of BMW, earnings have done very well overall, even though sales did not quite meet the expectations of analysts.

Companies on the Stoxx 600 trade at 15.2 times their estimated earnings, which is a decrease from last year’s 15.7 times – which is the highest its ever been in the last four years. This number is also 16.2 times cheaper for S&P 500 firms in the United States. Generally, the average price on European trading markets is cheaper than the average trade price on markets in the United States. Thus, it would be a good investment strategy to buy into the European market now, and wait for profits three to six months down the road.

BMW’s Profit

BMW’s stock price increase 1.1% to 89.37 euros. The largest luxury vehicle manufacturer in the world’s second quarter earnings before taxes and interest was 2.6 billion euros, which exceeded the expectations of 2.25 billion euros analysts had.

Earnings before interest and tax at the German auto maker increased to 11.7% of sales from 9.6% of sale the prior year. The company attributes this to selling more of its X5 sport-utility vehicles and greater deliveries in China. However, the company reported revenues of 19.9 billion euros, which fell short of analysts’ expectations of 20.2 billion euros.

Credit Agricole’s stock price grew 3.4% to 10.64 euros after releasing its second quarter earnings report. Its profit was 628 million euros, which beat out the estimate of 617 million euros. Credit Agricole is France’s third largest bank in terms of market value. The bank stated that it had a fully loaded common equity Tier 1 ratio, which is a vital solvency measure according to Basel III rules. The company increased to 9.9% from 9% the prior quarter. Credit Agricole also reported costs of 708 million euros related to its 14.6% equity stake in Banco Spirito Santo SA, a Portugeuse bank that was bailed out.

Deutsche Post

Deutsche Post increased 3.3% to 24.01 euros after reporting its second quarter earnings before interest and taxes, which was 654 million euros. Deutsche Post is the largest German parcel and international express business. Its earnings exceeded analysts predictions of 609.5 million euros for the quarter.

Aggreko Pic (AGK), a supplier of mobile power generators, saw its shares price go up 1.1% to 1,739 pence. The company reported sales of 768 million pounds (approximately $1.3 billion), and beat the consensus estimate of 742 million pounds.

Telefonica, dropped 1% to 11.88 euros. The telecommunications company based in Spain, announced that they tried to purchase GVT, the Brazilian branch of Internet provider company Vivendi. The offer was for 11.96 billion reais (or $5.3 billion) in cash and GVT shares.

 

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