Back to top

Image: Bigstock

7 Top Mid-Cap Stocks Set to Beat Earnings Estimates Next Week

Read MoreHide Full Article

We are in the middle of the third-quarter 2020 earnings season and so far, the overall results are better than expected. Market participants are watching the results closely as the quarter was a mixed one both in terms of economic data and stock market performance.

Notably, in the third quarter, the mid-cap (market capital > $1 billion to < $10 billion) specific S&P 400 Index registered a strong rally like its large-cap peers, despite facing a market mayhem in September. Reopening of a large part of the U.S. economy boosted mid-cap businesses. Meanwhile, seven mid-cap stocks with a favorable Zacks Rank are poised to beat earnings estimates next week.

Q3 Earnings Results So Far

The third-quarter earnings season has started on a positive note although overall earnings are likely to remain negative this quarter. As of Oct 28, 206 S&P 500 companies have reported results. Total earnings of these companies are down 11.3% from the same period last year on 3.5% lower revenues, with 83.5% beating EPS estimates and 78.2% surpassing revenue estimates.

Meanwhile, for the quarter as a whole, total S&P 500 earnings are expected to decline 15.2% on 2% lower revenues. This would mean an improvement over an earnings decline of 22% year over year on 2.9% lower revenues, as projected before the reporting cycle.  

This also implies a marked improvement over second-quarter earnings that plunged 32.3% on 9.2% lower revenues. Notably, the first-quarter earnings of companies on the S&P 500 Index were down 13.5% on 1.4% higher revenues. Read More: Will Rising Infections Derail Improving Earnings?)

Our Top Picks

We have narrowed down our search to seven mid-cap stocks that are slated to release their earnings results next week. 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 (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 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 seven picks in the third quarter.

 

Camping World Holdings Inc. (CWH - Free Report) operates as an outdoor and camping retailer. It operates through three segments: Consumer Services and Plans, Dealership and Retail. The Zacks Rank #1 company has an Earnings ESP of +22.91%.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 0.4% over the last 30 days. It has a trailing four-quarter earnings surprise of 44.9%, on average. The company is set to release earnings results on Nov 2, before the opening bell.

LCI Industries (LCII - Free Report) manufactures and supplies components for the manufacturers of recreational vehicles and adjacent industries in the United States and internationally. It operates in two segments, Original Equipment Manufacturers and Aftermarket. The Zacks Rank #1 company has an Earnings ESP of +6.12%.

The company has an expected earnings growth rate of 2.9% for the current year. The Zacks Consensus Estimate for the current year has improved 1.5% over the last 30 days. It has a trailing four-quarter earnings surprise of 68.3%, on average. The company is set to release earnings results on Nov 2, before the opening bell.

DCP Midstream LP (DCP - Free Report) owns, operates, acquires and develops a portfolio of midstream energy assets in the United States. It operates in two segments, Logistics and Marketing, and Gathering and Processing.

The Zacks Rank #1 company has an Earnings ESP of +4.77%. The Zacks Consensus Estimate for DCP Midstream's current-year earnings has improved 2.5% over the last 30 days. The company is set to release earnings results on Nov 4, after  the closing bell.

Nu Skin Enterprises Inc. (NUS - Free Report) develops and distributes a wide range of premium cosmetics, beauty, personal care and wellness products. The Zacks Rank #2 company has an Earnings ESP of +3.54%.

The company has an expected earnings growth rate of 1.9% for the current year. The Zacks Consensus Estimate for the current year has improved 5% over the last 30 days. It has a trailing four-quarter earnings surprise of 18.7%, on average. The company is set to release earnings results on Nov 4, after the closing bell.

Advanced Energy Industries Inc. (AEIS - Free Report) designs, manufactures, sells and supports precision power conversion, measurement and control solutions to the semiconductor industry worldwide. The Zacks Rank #2 company has an Earnings ESP of +1.03%.

The company has an expected earnings growth rate of 77.9% for the current year. The Zacks Consensus Estimate for the current year has improved 0.2% over the last 30 days. It has a trailing four-quarter earnings surprise of 39.1%, on average. The company is set to release earnings results on Nov 5, before the opening bell.

Advanced Drainage Systems Inc. (WMS - Free Report) designs, manufactures, and markets thermoplastic corrugated pipes and related water management products, and drainage solutions for use in the underground construction and infrastructure marketplace in the United States, Canada and internationally.

The Zacks Rank #1 company has an Earnings ESP of +4.35% for the second quarter of fiscal 2021 (ended September 2020). The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 0.4% over the last 30 days. The company is set to release earnings results on Nov 5, before the opening bell.

PennyMac Financial Services Inc. (PFSI - Free Report) is engaged in the mortgage banking and investment management activities in the United States. It operates through three segments: Loan Production, Loan Servicing and Investment Management. The Zacks Rank #1 company has an Earnings ESP of +4.39%.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 4.6% over the last 30 days. It has a trailing four-quarter earnings surprise of 26.2%, on average. The company is set to release earnings results on Nov 5, after the closing bell.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot stocks we're targeting >>