European companies haven't had such a low bar to clear in terms of earnings expectations in years, not least because of the highly complex geopolitical and macroeconomic backdrop, yet investors may only reward those that can protect their margins.
Bank of America analysis found in the three months to end-December more companies had their earnings estimates downgraded than upgraded than at any time in the last three years, with this ratio firmly in "net downgrade territory".
The pandemic and Ukraine war and the havoc both wreaked on global trade flows and raw material prices drove inflation to levels not seen in decades - forcing interest rates up with it - hitting consumers and industry, but plumping up company margins.
Now, those effects are subsiding, the global economy is slowing and the world is a volatile place. So this earnings season, it will come down to which companies can preserve their profit margins and which can't.
Net profit margins for the STOXX 600 (.STOXX), opens new tab peaked at 16.1% in the first quarter of 2023, but are expected to have fallen to 10.1% in the fourth quarter, according to LSEG I/B/E/S data.
But there are some sectors where margins are expected to hold up. Consumer cyclicals, consumer non-cyclicals, financials and industrials are forecast to see their net profit margin increase in the fourth quarter compared to the period before, the data showed.
Adding to the uncertainty is the disruption to global trade in the Red Sea, which has doubled freight rates, delayed deliveries and forced some automotive companies to pause output. That has stirred concerns of another bout of inflation.

The U.S economy should avoid a recession in the coming year, according to an increasingly large majority of economists polled by the National Association of Business Economics.
Some 91% of respondents to the latest NABE survey, published on Monday, assigned a probability of 50% or less to the U.S. entering a recession over the next 12 months.
That was up from 79% in the October survey, and a far cry from the view a year ago, when a majority of economists expected a recession as the Federal Reserve raised interest rates to fight high inflation.
The rising optimism apparent in the survey is in line with much of the latest economic data, including a measure of consumer sentiment that last week rose to a 2 1/2-year high. Also, inflation has been falling faster than expected, and the labor market is cooling but not collapsing.
Fed policymakers, who have held the policy rate in its current 5.25%-5.5% range since July, have signaled they are likely to cut rates this year as long as inflation continues to drop.
Economists polled by NABE expect corporate sales and profit margins to rise this year, and say supply chain problems and labor shortages are easing, potentially positive news for the inflation outlook.
Some 63% of respondents in the latest survey reported no shortages of input materials, up from 46% three months ago; and just over half of respondents reported no labor shortages, up from 38% from the prior report. Both are among the best readings since the pandemic began, NABE said.