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5 Top Large-Cap Stocks Set to Beat on Q2 Earnings This Week

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The coronavirus-stricken second-quarter 2020 earnings session will be in full swing this week. Although, consensus estimate of this earnings session is highly disappointing, several large-cap companies (market capital > $10 billion) are poised to beat earnings estimates this week. A few of them carry a favorable Zacks Rank.  

Q2 2020 At a Glance

The second quarter had two distinct characters. First, economic activities were way below last year since lockdowns continued till the third week of May. Several economists have forecast that this earnings session will be the worst in 12 years, since the days of the Great Recession.

On the other hand, a series of economic data have indicated that coronavirus-induced devastations may not be as serve as expected earlier. Unprecedented fiscal and monetary stimulus injected by the government and the Fed helped in strengthening consumer spending and business confidence. Consequently, Wall Street witnessed its best second quarter in more than two decades.

However, a second wave of COVID-19 in some states since the second half of June has forced them to again close some parts of their economies in less than a month. The resurgence significantly dented a section of economists and stifled financial experts' expectations of a V-shaped recovery of the U.S. economy.

Disappointing Expectations for Second-Quarter Earnings  

As of Jul 10, 19 S&P 500 members reported second-quarter 2020 earnings results. Total earnings of these companies are down 42.9% from the same period last year on 4.8% lower revenues. Of the total, 68.4% surpassed EPS estimates and 52.6% outpaced revenue estimates.

Overall, second-quarter  earnings for the S&P 500 Index are projected to be down 44.8% year over year on 10.7% lower revenues. Notably, first-quarter earnings of companies on the S&P 500 Index were down 13.5% on 1.4% higher revenues. (Read More: What Will Q2 Bank Earnings Reveal?)

Our Top Picks

We have narrowed down our search to five large-cap stocks. Each of these stocks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are expected to soar after 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.

 

Fastenal Co. (FAST - Free Report) is engaged in the wholesale distribution of industrial and construction supplies in the United States, Canada, Mexico, North America, and internationally. It offers fasteners, and related industrial and construction supplies under the Fastenal name. The Zacks Rank # 1 company has an Earnings ESP of +7.89%.

The Zacks Consensus Estimate for Fastenal's current-year earnings has improved 1.5% over the last 30 days. It has a trailing four-quarter positive earnings surprise of 0.7%, on average. The company is set to release earnings results on Jul 14, before the opening bell.

UnitedHealth Group Inc. (UNH - Free Report) is the largest health care services company globally, serving over 50 million individuals in the United States and over 5 million internationally. It operates through four segments: UnitedHealthcare, OptumHealth, OptumInsight, and OptumRx. The Zacks Rank # 2 company has an Earnings ESP of +7.69%.

UnitedHealth Group has an expected earnings growth rate of 7.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 7 days. It has a trailing four-quarter positive earnings surprise of 3.3%, on average. The company is set to release earnings results on Jul 15, before the opening bell.

Domino's Pizza Inc. (DPZ - Free Report) operates as a pizza delivery company in the United States and internationally. It operates through three segments: U.S. Stores, International Franchise, and Supply Chain. The company offers pizzas under the Domino's brand name through company-owned and franchised stores. The Zacks Rank # 2 company has an Earnings ESP of +12.27%.

Domino's Pizza has an expected earnings growth rate of 18.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 7 days. The company is set to release earnings results on Jul 16, before the opening bell.

BlackRock Inc. (BLK - Free Report) offers products that span the risk spectrum, including active, enhanced and index strategies through a variety of structures that include separate accounts, mutual funds, iShares (ETFs) and other pooled investment vehicles. The Zacks Rank # 2 company has an Earnings ESP of +5.59%.

The Zacks Consensus Estimate for BlackRock's current-year earnings has improved 0.1% over the last 7 days. It has a trailing four-quarter positive earnings surprise of 2.2%, on average. The company is set to release earnings results on Jul 17, before the opening bell.

State Street Corp. (STT - Free Report) provides a range of products and services for institutional investors worldwide through its subsidiaries. The Zacks Rank # 2 company has an Earnings ESP of +4.11%.

State Street has an expected earnings growth rate of 1.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.5% over the last 7 days. It has a trailing four-quarter positive earnings surprise of 3.9%, on average. The company is set to release earnings results on Jul 17, before the opening bell.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>