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We are in the second-half of the first-quarter earnings season. This week is the second busiest of this reporting cycle, as more than 1,900 companies are slated to report their quarterly financial numbers. Earnings results are so far better than expected.
Meanwhile, a few U.S. corporate bigwigs are set to beat on earnings this week. A handful of them currently carry a favorable Zacks Rank. The combination of a favorable Zacks Rank and an earnings beat should drive their stock prices in the near term.
As of May 3, 400 companies on the S&P 500 Index have reported their financial numbers. Total earnings for these 400 index members are up 4.4% from the same period last year on 4.2% higher revenues, with 78.3% beating EPS estimates and 56.7% beating revenue estimates.
At present, total earnings of the S&P 500 Index in first-quarter 2024 are expected to be up 2.9% on 3.8% higher revenues. This follows the 5.3% earnings growth on 4.3% higher revenues in fourth-quarter 2023 and 3.8% earnings growth on 2.2% higher revenues in third-quarter 2023.
Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. 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
Axon Enterprise Inc. (AXON - Free Report) is thriving on the back of strength across its TASER segment, driven by solid demand for TASER devices and higher cartridge revenues. Also, strong demand for the recently launched TASER 10 energy device, which has a maximum range of 45 feet, sparks optimism about the growth of the TASER segment.
The addition of new users and associated devices to the Axon network bodes well for AXON. Strong response for Axon body cameras and accessories is also likely to drive AXON’s performance in the quarters ahead. The acquisition of Sky-Hero expands AXON’s capabilities to protect life and helps it move ahead in its moonshot goal.
Axon Enterprise has an Earnings ESP of +5.97%. It has an expected earnings growth rate of 8.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
Axon Enterprise recorded earnings surprises in the last four reported quarters, with an average beat of 58.7%. The company is set to release earnings results on May 6, after the closing bell.
TopBuild Corp. (BLD - Free Report) is benefiting from its focus on productivity initiatives, light and heavy commercial work and high-demand patterns for multi-family homes. Besides, strategic acquisitions and favorable pricing are adding to BLD’s uptrend.
For 2023, gross and adjusted EBITDA margins expanded 120 basis points (bps) and 140 bps, respectively. BLD’s diversified business model and focus on driving operational efficiencies have led to the upside. For 2024, BLD expects net sales between $5.360 and $5.560 billion. The estimated figure indicates an increase from $5.19 billion reported in 2023.
TopBuild has an Earnings ESP of +1.47%. It has an expected earnings growth rate of 6.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
TopBuild recorded earnings surprises in the last four reported quarters, with an average beat of 12.4%. The company is set to release earnings results on May 7, before the opening bell.
Arista Networks Inc. (ANET - Free Report) is likely to benefit from a software-driven, data-centric approach that helps customers build their cloud architecture and enhance the cloud experience they offer their clients. The versatility of ANET’s unified software stack across various use cases, including WAN routing, campus and data center infrastructure, sets it apart from its competitors.
Healthy traction in the EMEA region is driving net sales in the international market. Steady improvement in lead times and easing of supply-chain woes are tailwinds. ANET expects a healthy improvement in gross margin, owing to the optimization of manufacturing output.
Arista Networks has an Earnings ESP of +3.76%. It has an expected earnings growth rate of 8.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last seven days.
Arista Networks recorded earnings surprises in the last four reported quarters, with an average beat of 13.3%. The company is set to release earnings results on May 7, after the closing bell.
Emerson Electric Co. (EMR - Free Report) has been benefiting from healthy demand across end markets. Strong demand across the process and hybrid markets are driving EMR’s underlying sales. Strength in the measurement and analytical and final control businesses is aiding its Intelligent Devices’ unit.
The successive acquisitions of Afag and Flexim sparked optimism in the stock. EMR’s ability to generate strong cash flows supports its capital deployment strategy. Also, EMR’s efforts to reward its shareholders add to its appeal.
Emerson Electric has an Earnings ESP of +1.99%. It has an expected earnings growth rate of 21.6% for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 2.1% over the last 90 days.
Emerson Electric recorded earnings surprises in three out of the last four reported quarters, with an average beat of 11.8%. The company is set to release earnings results on May 8, before the opening bell.
Robinhood Markets Inc. (HOOD - Free Report) operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies using its Robinhood Crypto platform.
Robinhood Markets has an Earnings ESP of +25.93%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 16% over the last 30 days.
Emerson Electric recorded earnings surprises in the last four reported quarters, with an average beat of 166.6%. The company is set to release earnings results on May 8, after the closing bell.
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Top 5 Stocks Poised to Beat on Earnings This Week
We are in the second-half of the first-quarter earnings season. This week is the second busiest of this reporting cycle, as more than 1,900 companies are slated to report their quarterly financial numbers. Earnings results are so far better than expected.
Meanwhile, a few U.S. corporate bigwigs are set to beat on earnings this week. A handful of them currently carry a favorable Zacks Rank. The combination of a favorable Zacks Rank and an earnings beat should drive their stock prices in the near term.
As of May 3, 400 companies on the S&P 500 Index have reported their financial numbers. Total earnings for these 400 index members are up 4.4% from the same period last year on 4.2% higher revenues, with 78.3% beating EPS estimates and 56.7% beating revenue estimates.
At present, total earnings of the S&P 500 Index in first-quarter 2024 are expected to be up 2.9% on 3.8% higher revenues. This follows the 5.3% earnings growth on 4.3% higher revenues in fourth-quarter 2023 and 3.8% earnings growth on 2.2% higher revenues in third-quarter 2023.
Our Top Picks
We have narrowed our search to five large-cap stocks that are poised to beat on earnings results this 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 chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. 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
Axon Enterprise Inc. (AXON - Free Report) is thriving on the back of strength across its TASER segment, driven by solid demand for TASER devices and higher cartridge revenues. Also, strong demand for the recently launched TASER 10 energy device, which has a maximum range of 45 feet, sparks optimism about the growth of the TASER segment.
The addition of new users and associated devices to the Axon network bodes well for AXON. Strong response for Axon body cameras and accessories is also likely to drive AXON’s performance in the quarters ahead. The acquisition of Sky-Hero expands AXON’s capabilities to protect life and helps it move ahead in its moonshot goal.
Axon Enterprise has an Earnings ESP of +5.97%. It has an expected earnings growth rate of 8.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
Axon Enterprise recorded earnings surprises in the last four reported quarters, with an average beat of 58.7%. The company is set to release earnings results on May 6, after the closing bell.
TopBuild Corp. (BLD - Free Report) is benefiting from its focus on productivity initiatives, light and heavy commercial work and high-demand patterns for multi-family homes. Besides, strategic acquisitions and favorable pricing are adding to BLD’s uptrend.
For 2023, gross and adjusted EBITDA margins expanded 120 basis points (bps) and 140 bps, respectively. BLD’s diversified business model and focus on driving operational efficiencies have led to the upside. For 2024, BLD expects net sales between $5.360 and $5.560 billion. The estimated figure indicates an increase from $5.19 billion reported in 2023.
TopBuild has an Earnings ESP of +1.47%. It has an expected earnings growth rate of 6.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
TopBuild recorded earnings surprises in the last four reported quarters, with an average beat of 12.4%. The company is set to release earnings results on May 7, before the opening bell.
Arista Networks Inc. (ANET - Free Report) is likely to benefit from a software-driven, data-centric approach that helps customers build their cloud architecture and enhance the cloud experience they offer their clients. The versatility of ANET’s unified software stack across various use cases, including WAN routing, campus and data center infrastructure, sets it apart from its competitors.
Healthy traction in the EMEA region is driving net sales in the international market. Steady improvement in lead times and easing of supply-chain woes are tailwinds. ANET expects a healthy improvement in gross margin, owing to the optimization of manufacturing output.
Arista Networks has an Earnings ESP of +3.76%. It has an expected earnings growth rate of 8.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last seven days.
Arista Networks recorded earnings surprises in the last four reported quarters, with an average beat of 13.3%. The company is set to release earnings results on May 7, after the closing bell.
Emerson Electric Co. (EMR - Free Report) has been benefiting from healthy demand across end markets. Strong demand across the process and hybrid markets are driving EMR’s underlying sales. Strength in the measurement and analytical and final control businesses is aiding its Intelligent Devices’ unit.
The successive acquisitions of Afag and Flexim sparked optimism in the stock. EMR’s ability to generate strong cash flows supports its capital deployment strategy. Also, EMR’s efforts to reward its shareholders add to its appeal.
Emerson Electric has an Earnings ESP of +1.99%. It has an expected earnings growth rate of 21.6% for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 2.1% over the last 90 days.
Emerson Electric recorded earnings surprises in three out of the last four reported quarters, with an average beat of 11.8%. The company is set to release earnings results on May 8, before the opening bell.
Robinhood Markets Inc. (HOOD - Free Report) operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies using its Robinhood Crypto platform.
Robinhood Markets has an Earnings ESP of +25.93%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 16% over the last 30 days.
Emerson Electric recorded earnings surprises in the last four reported quarters, with an average beat of 166.6%. The company is set to release earnings results on May 8, after the closing bell.