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Top 6 Stocks Poised to Beat on Q4 Earnings Tomorrow

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The fourth-quarter 2020 earnings season which started two weeks ago has gathered pace this week. So far, overall results are better-than-expected much to the pleasure of investors. Market participants are closely monitoring the trend to see if it continues till the end of the reporting cycle and the guidance issued by American corporates.

Meanwhile, six stocks are set to beat fourth-quarter earnings estimates tomorrow. Investment in these stocks should be fruitful going forward.

Q4 At a Glance

The momentum of U.S. economic recovery slowed down in fourth quarter 2020. The resurgence of coronavirus in several states has forced local governments to re-impose partial lockdown and restrict daily economic activities even during the holiday season. Moreover, the lack of a fresh round of fiscal stimulus owing to the disagreement in the U.S. Congress dented consumers' confidence.

Despite the above-mentioned negatives, the U.S. economy grew in the fourth quarter albeit at a slow pace. A recently released series of strong economic data clearly indicates this fact.

The Institute of Supply Management's (ISM) manufacturing purchasing managers' index (PMI) climbed to 60.7% in December from 57.5% in November, marking the highest level in almost two and a half years. Manufacturing activities have expanded for seven consecutive months, defying coronavirus-led economic devastations.

The ISM non-manufacturing (services) PMI for December increased to 57.2% from 55.9% in November, marking its three-month high. This was in contrast to the general view that the resurgence of coronavirus slowed the services sector activities the most.

Industrial production jumped 1.6% in December compared with the consensus estimate of 0.4%. November's data was revised upward from 0.4% to 0.5%. Manufacturing output rose 0.9%, marking its rise for eight consecutive months. Additionally, 12.7 million units of domestic vehicles were sold in December compared with 12.1 million units in the prior month.

The Department of Commerce reported that housing starts in December climbed 5.8% to a seasonally adjusted annual rate of 1.669 million units, surpassing the consensus estimate of 1.562 million units. Building permits in December surged 4.5% to a seasonally adjusted annual rate of 1.709 million units, outpacing the consensus estimate of 1.613 million units.

Our Top Picks

We have narrowed down our search to six stocks slated to release fourth-quarter earnings results tomorrow. 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 the 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 six picks in the last quarter.

 

Danaher Corp. (DHR - Free Report) designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide. It operates through three segments, namely Life Sciences, Diagnostics, and Environmental & Applied Solutions. The company currently has a Zacks Rank #2 and an Earnings ESP of +5.87%.

Danaher has an expected earnings growth rate of 19.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2% over the last 30 days. It has a trailing four-quarter earnings surprise of 17%, on average. The company is set to release earnings results on Jan 28, before the opening bell.

Dover Corp. (DOV - Free Report) is an industrial conglomerate providing equipment and components, consumable supplies, aftermarket parts, software and digital solutions and support services worldwide. The company currently has a Zacks Rank #2 and an Earnings ESP of +5.55%.

Dover has an expected earnings growth rate of 12.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days. It has a trailing four-quarter earnings surprise of 18.1%, on average. The company is set to release earnings results on Jan 28, before the opening bell.

PulteGroup Inc. (PHM - Free Report) is engaged in the homebuilding and financial services businesses, mainly in the United States. It conducts operations through two primary business segments –- Homebuilding and Financial Services. The company currently has a Zacks Rank #2 and an Earnings ESP of +0.41%.

PulteGroup has an expected earnings growth rate of 19.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the last 7 days. It has a trailing four-quarter earnings surprise of 17.2%, on average. The company is set to release earnings results on Jan 28, before the opening bell.

Hilltop Holdings Inc. (HTH - Free Report) offers a wide range of financial products and services in the United States. It operates in four segments: Banking, Broker-Dealer, Mortgage Origination, and Insurance. The company currently has a Zacks Rank #1 and an Earnings ESP of +9.80%.

Hilltop Holdings' Zacks Consensus Estimate for current-year earnings has improved 2.8% over the last 30 days. It has a trailing four-quarter earnings surprise of 68%, on average. The company is set to release earnings results on Jan 28, after the closing bell.

Olin Corp. (OLN - Free Report) manufactures and distributes chemical products in the United States and internationally. It operates through three segments: Chlor Alkali Products and Vinyls, Epoxy, and Winchester. The company currently has a Zacks Rank #2 and an Earnings ESP of +80.77%.

Olin has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 9.1% over the last 7 days. The company is set to release earnings results on Jan 28, after the closing bell.

National Instruments Corp. (NATI - Free Report) is an American multinational company with international operation producing automated test equipment and virtual instrumentation software. The company currently has a Zacks Rank #2 and an Earnings ESP of +9.92%.

National Instruments has an expected earnings growth rate of 19.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 30 days. It has a trailing four-quarter earnings surprise of 8.3%, on average. The company is set to release earnings results on Jan 28, after the closing bell.

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