The DAX has fallen more than 5.4% from its record high this year and is now trading near its lowest level since July. That weakness will be tested in October, when some of its largest constituents, including BMW, SAP, Volkswagen, and Deutsche Bank, report earnings.
BMW stock in focus as turnaround starts
BMW’s share price has been in a strong sell-off this year as concerns about its business have intensified. It has slipped more than 40% from its year-high, driven by ongoing weakness in China.
Now, the company has embarked on a turnaround strategy as it seeks to become more profitable. As part of this turnaround, the company is laying off 20% and incorporating more AI into its operations.
At the same time, it is working on reducing its vehicle models so that it can focus more on its high-margin vehicles. The goal is to boost its vehicle margins to between 3% and 5% by 2028 and between 8% and 10% in the next decade.
BMW stock will also be in the spotlight when it releases its earnings report on October 12. These numbers are expected to show some modest growth in its European business, which will be offset by weakness in China.
SAP
SAP, the biggest software company in Europe, has rebounded in the past few months, moving from €127 in July to €185 today. This rebound happened after it published its earnings report in July.
That report showed that its cloud backlog jumped by 27% to €22.9 billion, while its cloud revenue rose by 22%. At the same time, its cloud ERP Suite revenue rose by 22%, a sign that companies are embracing its platform. Some of the companies that increased their usage of its platform were Airbus, Acciona, Hindustan Zinc, and Vonovia.
The upcoming earnings report on October 21 will provide more information about its growth and market share gains. Technically, on the daily chart, the stock has formed a bullish flag pattern, which is made up of a vertical line and a horizontal channel. It normally leads to more gains over time.
Deutsche Bank
Deutsche Bank stock has retreated sharply in the past few weeks, moving from a high of €35.85 to the current €31.86. This retreat has coincided with that of other European banks like UniCredit and Santander.
Deutsche Bank has erased most of the gains that it made after its earnings report in July. Those results showed that its net profit jumped to €1.485 billion in the second quarter, with its revenue soaring to over €7 billion.
By segment, its investment banking revenue rose by 3% to €2.7 billion, with its fixed income and currencies soaring by 11%. The upcoming results are expected to show that its revenue and profitability growth continued.
READ MORE: Deutsche Bank beats estimates, posts record quarterly profit
Volkswagen
Volkswagen’s share price has crashed in the past few months as it has moved from one crises to another. It has plunged by over 30% from its highest point last year as its growth momentum has stalled. Most notably, it has announced a large layoffs as it seeks to boost its profitability.
Volkswagen will publish its earnings on October 29, providing more color on its business in key markets like the US and China.
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