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The fourth-quarter 2021 earnings season is approaching its end. The next week will be the last major week of big corporates releases. So far this reporting cycle, earnings have been well above initial expectations, in line with the first three quarters of 2021.
Next week, nearly 740 companies are slated to report results. At this stage, it will be prudent to invest in stocks with a favorable Zacks Rank that are set to beat on earnings. Five of them are The Mosaic Co. (MOS - Free Report) , Louisiana-Pacific Corp. (LPX - Free Report) , Lowe's Companies Inc. (LOW - Free Report) , NetApp Inc. (NTAP - Free Report) and Zscaler Inc. (ZS - Free Report) .
Solid Fourth-Quarter Earnings So Far
As of Feb 16, 388 S&P 500 companies reported fourth-quarter 2021 results. Total earnings of these companies are up 30.3% year over year on 16.3% higher revenues with 78.1% beating EPS estimates and 77.3% surpassing revenue estimates.
Total fourth-quarter earnings of the market's benchmark — the S&P 500 Index — are projected to climb 31.2% from the same period last year on 15% higher revenues. In the third quarter, earnings had increased 41.4% on 17.4% higher revenues. This was preceded by 95% year-over-year earnings growth on 25.3% higher revenues in the second quarter and 49.3% year-over-year earnings growth on 10.3% higher revenues in first-quarter 2021.
The first three quarters of the last year were favorably impacted compared with the pandemic-affected quarters of 2020, which were marked by lockdowns and restrictions. The U.S. economy started reopening at a slow pace from the beginning of the fourth quarter of 2020.
Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, the chances of an earnings beat are as high as 70%. These stocks are anticipated to appreciate after their earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our five picks in the last quarter.
Image Source: Zacks Investment Research
The Mosaic is likely to gain from higher demand for fertilizers. The demand for phosphate and potash in North America was strong in 2021. Strong grower economics are driving fertilizer demand globally for MOS. The Vale Fertilizantes buyout is also expected to deliver significant synergies. Mosaic is also expected to benefit from its cost-reduction actions. MOS’ efforts to lower debt are also encouraging.
Mosaic has an Earnings ESP of +1.79%. It has an expected earnings growth rate of 74.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.2% over the past 30 days.
MOS delivered earnings surprises in three of the last four reported quarters, with the average beat being 38.1%. Mosaic is set to release earnings on Feb 22, after the closing bell.
Louisiana-Pacific manufactures and markets building products primarily for use in new home construction, repair and remodeling, and outdoor structure markets. LPX has been reaping benefits from solid demand from the U.S. residential market. Strategic business transformation, effective cash management and inorganic moves are likely to boost the performance of Louisiana-Pacific in the future.
LPX has an Earnings ESP of +1.08%. The Zacks Consensus Estimate for current-year earnings has improved 3.5% over the past 30 days. Louisiana-Pacific recorded earnings surprises in the last four reported quarters, with the average beat being 10.5%. LPX is set to release earnings on Feb 22, before the opening bell.
Lowe's Companies remains well-positioned to capitalize on the demand in the home improvement market backed by investments in technology, merchandise category and strength in Pro business. Management is committed to expanding LOW’s market share and boosting the operating margin.
Lowe's Companies new total home strategy, which includes providing complete solutions for various types of home repair and improvement, bodes well. The strategy is an extension of LOW’s retail-fundamentals approach.
Lowe's Companies has an Earnings ESP of +6.81%. It has an expected earnings growth rate of 7.6% for the current year (ending January 2023). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the past seven days.
LOW recorded earnings surprises in the last four reported quarters, with the average beat being 14.3%. Lowe's Companies is set to release earnings on Feb 23.
NetApp provides a full range of hybrid cloud data services that simplify the management of applications and data across cloud and on-premises environments to accelerate digital transformation. NTAP’s performance is gaining from continued strength in Hybrid Cloud and Public Cloud segments and robust billings growth.
NetApp is gaining from the growing clout of cloud-integrated all-flash solutions, File, Block and Object Software products, and hybrid multi-cloud offerings. Synergies from the recent acquisitions of Spot, Cloud Jumper and Talon Storage bode well. NTAP raised fiscal 2022 revenue outlook on robust demand pipeline for the second half of fiscal 2022.
NetApp has an Earnings ESP of +0.39%. It has an expected earnings growth rate of 24.6% for the current year (ending March 2022). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 30 days.
NTAP recorded earnings surprises in the last four reported quarters, with the average beat being 9.8%. NetApp is set to release earnings on Feb 23, after the closing bell.
Zscaler is benefiting from the rising demand for cyber-security solutions owing to the slew of data breaches. Increasing demand for privileged access security on digital transformation and cloud-migration strategies is a key growth driver of ZS.
Zscaler’s portfolio boosts its competitive edge and helps add users. Moreover, a strong presence across verticals, such as banking, insurance, healthcare, public sector, pharmaceuticals, telecommunications services and education, is safeguarding Zscaler from the pandemic’s negative impact. Also, recent acquisitions, like Smokescreen and Trustdome, are expected to enhance ZS’ portfolio.
Zscaler has an Earnings ESP of +2.10%. ZS recorded earnings surprises in the last four reported quarters, with the average beat being 52.9%. Zscaler is set to release earnings on Feb 24, after the closing bell.
Image: Bigstock
Top 5 Stocks Poised to Beat on Earnings Next Week
The fourth-quarter 2021 earnings season is approaching its end. The next week will be the last major week of big corporates releases. So far this reporting cycle, earnings have been well above initial expectations, in line with the first three quarters of 2021.
Next week, nearly 740 companies are slated to report results. At this stage, it will be prudent to invest in stocks with a favorable Zacks Rank that are set to beat on earnings. Five of them are The Mosaic Co. (MOS - Free Report) , Louisiana-Pacific Corp. (LPX - Free Report) , Lowe's Companies Inc. (LOW - Free Report) , NetApp Inc. (NTAP - Free Report) and Zscaler Inc. (ZS - Free Report) .
Solid Fourth-Quarter Earnings So Far
As of Feb 16, 388 S&P 500 companies reported fourth-quarter 2021 results. Total earnings of these companies are up 30.3% year over year on 16.3% higher revenues with 78.1% beating EPS estimates and 77.3% surpassing revenue estimates.
Total fourth-quarter earnings of the market's benchmark — the S&P 500 Index — are projected to climb 31.2% from the same period last year on 15% higher revenues. In the third quarter, earnings had increased 41.4% on 17.4% higher revenues. This was preceded by 95% year-over-year earnings growth on 25.3% higher revenues in the second quarter and 49.3% year-over-year earnings growth on 10.3% higher revenues in first-quarter 2021.
The first three quarters of the last year were favorably impacted compared with the pandemic-affected quarters of 2020, which were marked by lockdowns and restrictions. The U.S. economy started reopening at a slow pace from the beginning of the fourth quarter of 2020.
Our Top Picks
We have narrowed our search to five stocks that will release earnings next week. Each of these stocks carries a Zacks Rank#2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, the chances of an earnings beat are as high as 70%. These stocks are anticipated to appreciate after their earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our five picks in the last quarter.
Image Source: Zacks Investment Research
The Mosaic is likely to gain from higher demand for fertilizers. The demand for phosphate and potash in North America was strong in 2021. Strong grower economics are driving fertilizer demand globally for MOS. The Vale Fertilizantes buyout is also expected to deliver significant synergies. Mosaic is also expected to benefit from its cost-reduction actions. MOS’ efforts to lower debt are also encouraging.
Mosaic has an Earnings ESP of +1.79%. It has an expected earnings growth rate of 74.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.2% over the past 30 days.
MOS delivered earnings surprises in three of the last four reported quarters, with the average beat being 38.1%. Mosaic is set to release earnings on Feb 22, after the closing bell.
Louisiana-Pacific manufactures and markets building products primarily for use in new home construction, repair and remodeling, and outdoor structure markets. LPX has been reaping benefits from solid demand from the U.S. residential market. Strategic business transformation, effective cash management and inorganic moves are likely to boost the performance of Louisiana-Pacific in the future.
LPX has an Earnings ESP of +1.08%. The Zacks Consensus Estimate for current-year earnings has improved 3.5% over the past 30 days. Louisiana-Pacific recorded earnings surprises in the last four reported quarters, with the average beat being 10.5%. LPX is set to release earnings on Feb 22, before the opening bell.
Lowe's Companies remains well-positioned to capitalize on the demand in the home improvement market backed by investments in technology, merchandise category and strength in Pro business. Management is committed to expanding LOW’s market share and boosting the operating margin.
Lowe's Companies new total home strategy, which includes providing complete solutions for various types of home repair and improvement, bodes well. The strategy is an extension of LOW’s retail-fundamentals approach.
Lowe's Companies has an Earnings ESP of +6.81%. It has an expected earnings growth rate of 7.6% for the current year (ending January 2023). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the past seven days.
LOW recorded earnings surprises in the last four reported quarters, with the average beat being 14.3%. Lowe's Companies is set to release earnings on Feb 23.
NetApp provides a full range of hybrid cloud data services that simplify the management of applications and data across cloud and on-premises environments to accelerate digital transformation. NTAP’s performance is gaining from continued strength in Hybrid Cloud and Public Cloud segments and robust billings growth.
NetApp is gaining from the growing clout of cloud-integrated all-flash solutions, File, Block and Object Software products, and hybrid multi-cloud offerings. Synergies from the recent acquisitions of Spot, Cloud Jumper and Talon Storage bode well. NTAP raised fiscal 2022 revenue outlook on robust demand pipeline for the second half of fiscal 2022.
NetApp has an Earnings ESP of +0.39%. It has an expected earnings growth rate of 24.6% for the current year (ending March 2022). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 30 days.
NTAP recorded earnings surprises in the last four reported quarters, with the average beat being 9.8%. NetApp is set to release earnings on Feb 23, after the closing bell.
Zscaler is benefiting from the rising demand for cyber-security solutions owing to the slew of data breaches. Increasing demand for privileged access security on digital transformation and cloud-migration strategies is a key growth driver of ZS.
Zscaler’s portfolio boosts its competitive edge and helps add users. Moreover, a strong presence across verticals, such as banking, insurance, healthcare, public sector, pharmaceuticals, telecommunications services and education, is safeguarding Zscaler from the pandemic’s negative impact. Also, recent acquisitions, like Smokescreen and Trustdome, are expected to enhance ZS’ portfolio.
Zscaler has an Earnings ESP of +2.10%. ZS recorded earnings surprises in the last four reported quarters, with the average beat being 52.9%. Zscaler is set to release earnings on Feb 24, after the closing bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.