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5 Corporate Bigwigs to Buy Ahead of Earnings Results Tomorrow
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Wall Street will remain busy this week to analyze second-quarter 2021 earnings results as nearly 1,000 companies will report their financial numbers and other metrics. Although market participants' primary focus will be on the technology behemoths that will release their quarterly results, a series of other corporate bigwigs will also come up with their quarterly numbers.
The second-quarter earnings season is very impressive so far. Despite this, markets were initially reluctant to express this enthusiasm. While some financial experts said that high expectations of second-quarter earnings were already factored in stock prices, some others cited that mounting inflation and the resurgence of the highly infectious Delta string of the coronavirus have dampened the bulls' spirit.
Nevertheless, last week, Wall Street witnessed a fabulous rally predominantly owing to impressive results. The momentum is likely to remain through the rest of the earnings season as expectations are high.
Meanwhile, five corporate giants, other than the big techs, are poised to beat on earnings results tomorrow. The combination of a favorable Zacks Rank and a possible earnings beat are likely to drive their stock prices going forward.
Impressive Q2 Earnings So Far
As of Jul 23, 120 companies of the S&P 500 Index reported results. Total earnings of these companies were up 118.9% year over year on 18.4% higher revenues. Moreover, 89.2% of these companies beat their earnings per share (EPS) estimates and 85% surpassed revenue estimates.
For the second quarter as a whole, total earnings of the S&P 500 Index are expected to be up 74.3% year over year on 20% higher revenues. This indicates an improvement over the initial projection of EPS increasing 62.2% from the same period last year on 18.2% higher revenues.
These estimates are impressive primarily because second-quarter 2020 witnessed a lockdown owing to the global outbreak of the deadly coronavirus. Notwithstanding favorable comparisons with last year, second-quarter 2021 earnings estimates indicate growth of nearly 18.2% from the pre-pandemic second quarter of 2019.
Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better, 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 five picks in the last quarter.
Image Source: Zacks Investment Research
3M Co. (MMM - Free Report) is well positioned to benefit from its solid product portfolio, marketing activities, inorganic actions and shareholder-friendly policies in the quarters ahead. It is focused on business transformation with moves like the localization of decision making and integration of supply chains, which enhance its competitive advantage.
In the long term, 3M intends to become more competent on the back of product-portfolio solidification. Its household products like Nexcare, Post-it, Scotch, Scotch-Brite and Scotchgard are market leaders in their individual categories.
The company has an Earnings ESP of +1.11% for second-quarter 2021. It has an expected earnings growth rate of 11.9% for the current year. The Zacks Consensus Estimate for the current year has improved 0.5% over the last 60 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 9.9%. The company is set to release earnings results on Jul 27, before the opening bell.
Advanced Micro Devices Inc. (AMD - Free Report) has attained the position of a major player in the microprocessor and graphics processing markets. The company plans to expand its semi-custom business into high-growth markets such as the semi-custom ultra-low power client, embedded, dense server and professional graphics markets, where it can offer differentiated products that use its APU and graphics IP.
Given the persistent weakness in the core PC business, Advanced Micro Devices has started investing in its embedded business. Strength in this segment should continue in the future too as the company scores more wins.
The company has an Earnings ESP of +3.41% for second-quarter 2021. It has an expected earnings growth rate of 68.2% for the current year. The Zacks Consensus Estimate for the current year has improved 0.5% over the last 30 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 13.8%. The company is set to release earnings results on Jul 27, after the closing bell.
Visa Inc. (V - Free Report) has undertaken mergers and acquisitions, partnerships, and minority investments to achieve growth. These moves have helped the company to maintain its leading position in the payment network space with 50% more payments volume than its closest competitors.
Some of Visa’s acquisitions are Earthport, Payworks, Verifi, YellowPepper, and the ticketing and token services business of Rambus. These acquisitions and investments will accelerate its progress and extend the boundaries of its capabilities and network.
In June 2021, Visa has signed an agreement to acquire Tink, a European open banking platform. The move resonates with Visa’s efforts to be part of the Open-Banking innovation, which is being adopted by banks at a rapid rate.
The company has an Earnings ESP of +2.85% for third-quarter fiscal 2021 (ended June 2021). It has an expected earnings growth rate of 11.5% for the current year (ending September 2021). The Zacks Consensus Estimate for the current year has improved 0.2% over the last 7 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 7%. The company is set to release earnings results on Jul 27, after the closing bell.
Starbucks Corp. (SBUX - Free Report) has been benefiting from initiatives with respect to opening stores in new and existing markets, remodeling existing stores, deploying technology, controlling costs and aggressive product innovation and brand building.
Starbucks is strengthening its product portfolio with significant innovation around beverages, refreshment, health and wellness, tea and core food offerings. It is leaning toward fast-growing categories like Cold Brew, Draft Nitro beverages, and plant-based modifiers, including almond, coconut, and soy milk alternatives. Apart from the numerous beverage innovations, Starbucks has also been making an effort to offer more nutritional and healthy products to its customers.
The company has an Earnings ESP of +1.83% for third-quarter fiscal 2021 (ended June 2021). It has an expected earnings growth rate of more than 100% for the current year (ending September 2021).
The Zacks Consensus Estimate for the current year has improved 0.3% over the last 60 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 27.3%. The company is set to release earnings results on Jul 27, after the closing bell.
Mondelez International Inc. (MDLZ - Free Report) is seeing continued demand for snacks amid elevated at-home consumption. The company’s focus on brand building through innovation and lucrative acquisitions along with cost savings bodes well.
Mondelez has been undertaking some major steps to enhance its savings, which are improving its margins and cash flow. Moreover, such savings are being invested in brand-building endeavors. Management is on track with its savings initiatives such as zero-based budgeting. It is also on track to eliminate other unnecessary costs from the supply chain.
The company has an Earnings ESP of +0.78% for second-quarter 2021. It has an expected earnings growth rate of 13.1% for the current year. The Zacks Consensus Estimate for the current year has improved 0.3% over the last 7 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 6%. The company is set to release earnings results on Jul 27, after the closing bell.
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5 Corporate Bigwigs to Buy Ahead of Earnings Results Tomorrow
Wall Street will remain busy this week to analyze second-quarter 2021 earnings results as nearly 1,000 companies will report their financial numbers and other metrics. Although market participants' primary focus will be on the technology behemoths that will release their quarterly results, a series of other corporate bigwigs will also come up with their quarterly numbers.
The second-quarter earnings season is very impressive so far. Despite this, markets were initially reluctant to express this enthusiasm. While some financial experts said that high expectations of second-quarter earnings were already factored in stock prices, some others cited that mounting inflation and the resurgence of the highly infectious Delta string of the coronavirus have dampened the bulls' spirit.
Nevertheless, last week, Wall Street witnessed a fabulous rally predominantly owing to impressive results. The momentum is likely to remain through the rest of the earnings season as expectations are high.
Meanwhile, five corporate giants, other than the big techs, are poised to beat on earnings results tomorrow. The combination of a favorable Zacks Rank and a possible earnings beat are likely to drive their stock prices going forward.
Impressive Q2 Earnings So Far
As of Jul 23, 120 companies of the S&P 500 Index reported results. Total earnings of these companies were up 118.9% year over year on 18.4% higher revenues. Moreover, 89.2% of these companies beat their earnings per share (EPS) estimates and 85% surpassed revenue estimates.
For the second quarter as a whole, total earnings of the S&P 500 Index are expected to be up 74.3% year over year on 20% higher revenues. This indicates an improvement over the initial projection of EPS increasing 62.2% from the same period last year on 18.2% higher revenues.
These estimates are impressive primarily because second-quarter 2020 witnessed a lockdown owing to the global outbreak of the deadly coronavirus. Notwithstanding favorable comparisons with last year, second-quarter 2021 earnings estimates indicate growth of nearly 18.2% from the pre-pandemic second quarter of 2019.
In fact, the earnings estimates for 2021 have been growing steadily since the beginning of this year. (Read More: Big Tech Earnings Preview: Apple, Amazon and Other Market Movers)
Our Top Picks
We have narrowed down our search to five corporate giants that are slated to release earnings results tomorrow. 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 positive Earnings ESP and a Zacks Rank #3 (Hold) or better, 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 five picks in the last quarter.
Image Source: Zacks Investment Research
3M Co. (MMM - Free Report) is well positioned to benefit from its solid product portfolio, marketing activities, inorganic actions and shareholder-friendly policies in the quarters ahead. It is focused on business transformation with moves like the localization of decision making and integration of supply chains, which enhance its competitive advantage.
In the long term, 3M intends to become more competent on the back of product-portfolio solidification. Its household products like Nexcare, Post-it, Scotch, Scotch-Brite and Scotchgard are market leaders in their individual categories.
The company has an Earnings ESP of +1.11% for second-quarter 2021. It has an expected earnings growth rate of 11.9% for the current year. The Zacks Consensus Estimate for the current year has improved 0.5% over the last 60 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 9.9%. The company is set to release earnings results on Jul 27, before the opening bell.
Advanced Micro Devices Inc. (AMD - Free Report) has attained the position of a major player in the microprocessor and graphics processing markets. The company plans to expand its semi-custom business into high-growth markets such as the semi-custom ultra-low power client, embedded, dense server and professional graphics markets, where it can offer differentiated products that use its APU and graphics IP.
Given the persistent weakness in the core PC business, Advanced Micro Devices has started investing in its embedded business. Strength in this segment should continue in the future too as the company scores more wins.
The company has an Earnings ESP of +3.41% for second-quarter 2021. It has an expected earnings growth rate of 68.2% for the current year. The Zacks Consensus Estimate for the current year has improved 0.5% over the last 30 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 13.8%. The company is set to release earnings results on Jul 27, after the closing bell.
Visa Inc. (V - Free Report) has undertaken mergers and acquisitions, partnerships, and minority investments to achieve growth. These moves have helped the company to maintain its leading position in the payment network space with 50% more payments volume than its closest competitors.
Some of Visa’s acquisitions are Earthport, Payworks, Verifi, YellowPepper, and the ticketing and token services business of Rambus. These acquisitions and investments will accelerate its progress and extend the boundaries of its capabilities and network.
In June 2021, Visa has signed an agreement to acquire Tink, a European open banking platform. The move resonates with Visa’s efforts to be part of the Open-Banking innovation, which is being adopted by banks at a rapid rate.
The company has an Earnings ESP of +2.85% for third-quarter fiscal 2021 (ended June 2021). It has an expected earnings growth rate of 11.5% for the current year (ending September 2021). The Zacks Consensus Estimate for the current year has improved 0.2% over the last 7 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 7%. The company is set to release earnings results on Jul 27, after the closing bell.
Starbucks Corp. (SBUX - Free Report) has been benefiting from initiatives with respect to opening stores in new and existing markets, remodeling existing stores, deploying technology, controlling costs and aggressive product innovation and brand building.
Starbucks is strengthening its product portfolio with significant innovation around beverages, refreshment, health and wellness, tea and core food offerings. It is leaning toward fast-growing categories like Cold Brew, Draft Nitro beverages, and plant-based modifiers, including almond, coconut, and soy milk alternatives. Apart from the numerous beverage innovations, Starbucks has also been making an effort to offer more nutritional and healthy products to its customers.
The company has an Earnings ESP of +1.83% for third-quarter fiscal 2021 (ended June 2021). It has an expected earnings growth rate of more than 100% for the current year (ending September 2021).
The Zacks Consensus Estimate for the current year has improved 0.3% over the last 60 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 27.3%. The company is set to release earnings results on Jul 27, after the closing bell.
Mondelez International Inc. (MDLZ - Free Report) is seeing continued demand for snacks amid elevated at-home consumption. The company’s focus on brand building through innovation and lucrative acquisitions along with cost savings bodes well.
Mondelez has been undertaking some major steps to enhance its savings, which are improving its margins and cash flow. Moreover, such savings are being invested in brand-building endeavors. Management is on track with its savings initiatives such as zero-based budgeting. It is also on track to eliminate other unnecessary costs from the supply chain.
The company has an Earnings ESP of +0.78% for second-quarter 2021. It has an expected earnings growth rate of 13.1% for the current year. The Zacks Consensus Estimate for the current year has improved 0.3% over the last 7 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 6%. The company is set to release earnings results on Jul 27, after the closing bell.