The upcoming second-quarter earnings season is poised to begin strongly, with 124 S&P 500 companies, representing nearly a quarter of the benchmark index, scheduled to release their financial results. Notably, seven components of the Dow Jones Industrial Average are among these companies, making this week a crucial period for investors to monitor market activity closely.
Earnings reports have so far surpassed expectations, with FactSet data indicating that 80% of the 61 S&P 500 companies that have already reported have exceeded analyst earnings estimates. Furthermore, 61% of these companies have delivered a positive revenue surprise. FactSet projections suggest a blended year-over-year earnings growth rate of 9.3% for the S&P 500 in the second quarter, marking the highest rate in over two years.
To identify potential winners among the upcoming earnings reports, CNBC Pro conducted a screening of FactSet data to pinpoint S&P 500 companies that could see an upward trend in their stock prices based on Wall Street analysts’ expectations. The screening criteria included companies with at least 15 upward earnings per share estimate revisions in the past three months, 10 or fewer downward revisions within the same period, consensus earnings per share estimates increasing by at least 10% in the past three months and 5% in the past six months, and an average analyst price target rising by at least 5% in the last three months.
Among the companies that met these criteria, Royal Caribbean stands out as a potential beneficiary of a post-earnings boost. Analysts have raised the cruise operator’s earnings estimates by 15% and 17% in the past three and six months, respectively. The stock has already witnessed a 26% year-to-date surge, and JPMorgan recently reaffirmed its overweight rating on Royal Caribbean, with a price target of $175. The bank believes the company is well-positioned for market share gains and sustained success due to its enhanced product offerings.
Another stock with potential for a post-earnings rally is Seagate Technology, a data storage firm whose shares have climbed nearly 21% in 2024. Analysts have revised their earnings estimates upwards by 25% and 64% in the past three and six months, respectively. Bank of America has maintained its bullish stance on Seagate, attributing its optimism to secular demand trends and margin recovery as key drivers for the stock’s performance.
Deckers Outdoor, a footwear retailer, is also on the watchlist for potential post-earnings gains. The company is set to report its fiscal first-quarter 2025 earnings, with analysts predicting a strong performance based on a 15% increase in the consensus price target over the last three months. Shares of Deckers Outdoor have already experienced a 33% surge in 2024, and UBS has reiterated its buy rating with a 12-month price target of $1,265, representing significant upside potential.
In summary, the upcoming earnings reports present an opportunity for investors to capitalize on potential winners in the market. By closely monitoring companies that meet the specified criteria and analyzing analyst expectations, investors can make informed decisions to maximize their returns during this earnings season.
Source: https://www.cnbc.com/2024/07/19/these-stocks-reporting-next-week-have-strong-earnings-momentum.html