We can't get enough of earnings season here at Zacks! It's like having Christmas four times a year.
Not only do these reports give us a peek behind the curtain during one of the longest bull markets in history, but they are also big determinants on earnings estimate revisions. In other words, it gives the Zacks Rank a chance to flex its muscles and show why it is the best tool in finding stocks set to outperform.
According to Sheraz Mian’s most recent Earnings Trends article, total S&P earnings through Wednesday, July 18 were up 23%. Overall, total earnings for the S&P are expected to jump more than 19% from last year. This week will be the busiest (and perhaps most consequential) of the season, as three of the four FANG names are scheduled to report.
Earnings season is unpredictable both in the numbers that are reported and in the market's reaction to them. It’s not just about finding companies that beat expectations. You need to find stocks that will advance AFTER a strong report. One of the best places to look for these earnings superstars is Zacks' EPS Growth, Revisions & Positive Surprises screen.
As the name implies, this screen seeks out Zacks Rank #1s (Strong Buys) with positive surprises and upward earnings estimates. These stocks are the best positioned to outperform in the near and longer terms.
Below are two stocks that are scheduled to report his week and one that has already done so. But remember, there are dozens of names that passed this screen's criteria. So after reading these profiles, make sure to go to Zacks Premium to look up the other names and the parameters. If you're not a ZP member, earnings season is a great time to sign up.
Intel (INTC - Free Report)
With 17 straight quarters of positive surprises, Intel (INTC - Free Report) must love earnings season as much as we do here at Zacks. The last time this chipmaking giant fell short of our expectations was in January 2014. It has amassed an average surprise of more than 20% in the past four quarters.
The biggest news INTC made in the past month or so was when CEO Brian Krzanich suddenly resigned after violating the company's anti-fraternization policy. However, that odd story isn't as important as the next report on July 26 after the close.
In late April, INTC reported first-quarter earnings of 87 cents per share, which topped the Zacks Consensus Estimate by 22.5%. Revenues of $16.1 billion also surpassed our expectations of $15.05 billion by more than a billion dollars.
Right now, the consensus is calling for 99 cents for the second quarter, which would mark a 37.5% advance of the year-earlier quarter of 72 cents.
Currently, the Zacks Consensus Estimate for this year is at $4.03 per share, marking a 13.5% boost in the past 90 days. The expectations for next year show the same type of advance. Earnings of $4.22 increased 10.4% over the last three months. We also see a 4.7% improvement from year to year, though that could certainly rise as INTC still has three quarters to report for 2018.
ConocoPhillips (COP - Free Report)
You can bet there are plenty of energy-related names on this screen now that oil is rising and looking to push past $70 a barrel. For example, the oil & gas – integrated space is in the top 23% of the Zacks Industry Rank, which puts it 58th out of 256 names. Given such an encouraging environment, ConocoPhillips (COP - Free Report) , one of the biggest names in the space, has passed the criteria for the list.
There are plenty of impressive things about this E&P behemoth, but here at Zacks we have a real soft spot for rising earnings estimates. Analysts have been steadily raising their expectations on COP for months now. The Zacks Consensus Estimate for this year is at $4.28 per share, which marks an 11.7% gain in two months.
Analysts then expect earnings to jump another 11% in 2019 to $4.76. This estimate rose 20.2% in two months.
This steady stream of upward revisions is what you get when amassing a four-quarter average surprise of 226.9%! In the first quarter, COP topped the Zacks Consensus Estimate by practically 30% with earnings of 96 cents per share. We were expecting only 74 cents. Revenues of $8.96 billion also exceeding our expectations of $8.68 billion. The next report comes on July 26th.
Shares of COP have gained nearly 30% so far this year, which easily outperforms its highly-ranked industry’s more than 18% gain. The chart says it all:
Adobe Systems (ADBE - Free Report)
Let’s talk about a company that has already reported a strong quarter and watched its earnings estimates rise. If you’ve ever opened a PDF file or Flash video (and that's pretty much everyone who owns a computer), then you know all about Adobe Systems (ADBE - Free Report) . The company is one of the biggest graphic design, publishing and imaging software companies in the world.
The stock has gained approximately 47% so far this year, which more than doubled the nearly 21% return for its highly-ranked industry of Computer- Software (top 31% of Zacks Industry Rank). ADBE has beaten the Zacks Consensus Estimate for 15 straight quarters now.
The most recent report in mid-June included a 7.8% positive surprise, as earnings per share of $1.66 beat the Zacks Consensus Estimate of $1.54. It now has an average beat of nearly 9% over the last four quarters. Revenue jumped 24% from last year to $2.2 billion, which also topped our expectations of $2.15 billion.
In the past 60 days, most analysts covering the company revised their expectations upward. As a result, the Zacks Consensus Estimate for this fiscal year (which ends in November) reached $6.64 per share, marking a gain of 3.9% in that time.
For next fiscal year (ending November 2019), analysts expect earnings to jump 13.4% year over year to $7.53 in a sign that this company’s success isn’t expected to end anytime soon. The estimate has climbed 4.6% in 2 months.
These higher revisions also take into account the company’s acquisition of Magento Commerce a few days after the earnings report. The company’s Magento Commerce Cloud will now combine with the Adobe Experience Cloud to deliver a single digital experience platform that includes content creation, marketing, advertising, analytics and commerce.
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