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6 Top-Ranked S&P 500 Stocks Poised to Beat on Q2 Earnings

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The second-quarter 2021 earnings season got off to a flying start with better-than-expected results. Market participants have high expectations as corporate profits are expected to have soared in the last quarter.

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.  

Meanwhile, six Zacks Top-Ranked stocks are set to beat on earnings results within the next seven trading days. Investment in these stocks may be prudent in the near term.

S&P 500 in Q2 At a Glance

Year to date, the S&P 500 Index is the best Wall Street performer in comparison to the two other major indexes. The market's benchmark index has rallied 17.7% so far this year, while the Blue-chip Dow and the tech-laden Nasdaq Composite have gained 14.8% and 15.2%, respectively.

However, in the second quarter, the S&P 500 lagged its peer. The broad-market index surged 4.6%, while the Dow and the Nasdaq Composite climbed 8.2% and 9.5%, respectively. This was primarily due to mounting inflationary pressures that have resulted in market volatility.

Nevertheless, rapid vaccination coupled with government stimulus supported the economy in its path to recovery from the COVID-19 pandemic in second-quarter 2021. Investors focused on energy, financials and industrials stocks that benefitted in the early stage of the economic cycle. Consequently, the S&P 500 also moved northward.

Our Top Picks

We have narrowed down our search to six S&P 500 stocks that are slated to release second-quarter earnings results within the next seven trading days. Each of these stocks carries a Zacks Rank #1 (Strong 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 six picks in the last quarter.

Zacks Investment Research
Image Source: Zacks Investment Research

Cincinnati Financial Corp. (CINF - Free Report) :  The Commercial Lines Insurance segment of this company has been consistently growing over the past several quarters, led by growth initiatives and price increases. Also, its premiums continue to grow through a disciplined expansion of Cincinnati Re while the division makes a nice contribution to the company’s overall earnings.

The company has an Earnings ESP of +10.98%. It has an expected earnings growth rate of 38.1% for the current year. The Zacks Consensus Estimate for the current year has improved 7.1% over the last 30 days. It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 17.6%. The company is set to release earnings results on Jul 28, after the closing bell.

Under Armour Inc. (UAA - Free Report) : The company has been benefiting from its robust direct-to-consumer business. In the past few years it has been trying to boost its direct-to-consumer business through store expansion initiatives and enhancement of the e-commerce platform. The company is focused on strengthening its brand through improved customer connections and effective innovations.

The company has an Earnings ESP of +47.69%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 3.1% over the last 30 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 286%. The company is set to release earnings results on Aug 3, before the opening bell.

Marriott International Inc. (MAR - Free Report) : The company has been benefitting from its continuous focus on expansion initiatives, digital innovation and loyalty program. Marriott is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. The company plans to significantly expand its global portfolio of luxury and lifestyle brands.

Marriott has an Earnings ESP of +32.52%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 0.9% over the last 7 days. It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 98.4%. The company is set to release earnings results on Aug 3, before the opening bell.

ConocoPhillips (COP - Free Report) : It holds a bulk of acres in the three big unconventional plays, namely Eagle Ford shale, Delaware basin and Bakken shale, which are rich in oil. The company has long-term plans to spend almost $4 billion per annum on the shale plays and operate around 20 rigs across four major fields. The upstream energy player also has a foothold in Canada’s oil sand resources and has exposure to developments related to liquefied natural gas.

The company has an Earnings ESP of +8.25%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 4.7% over the last 7 days. The company is set to release earnings results on Aug 3, before the opening bell.

General Motors Co. (GM - Free Report) is seeing strong demand for profitable trucks and SUVs that is driving its revenues. The company revamped the crossover lineup and is launching all-new, full-size pickups, followed by full-size SUVs. Its hot-selling brands in the United States like Chevrolet Silverado, Equinox and GMC Sierra are driving the top line. The demand for these brands is expected to grow further.

The company has an Earnings ESP of +19.83%. It has an expected earnings growth rate of 38.6% for the current year. The Zacks Consensus Estimate for the current year has improved 2.6% over the last 7 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 75.8%. The company is set to release earnings results on Aug 4, before the opening bell.

EOG Resources Inc. (EOG - Free Report) has an attractive growth profile, a huge inventory of drilling opportunities, upper quartile returns and a disciplined management team. It has significant acreages in oil shale plays like Permian, Bakken and Eagle Ford.

The company has an Earnings ESP of +3.54%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 7% over the last 7 days. It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 51%. The company is set to release earnings results on Aug 4, after the closing bell.

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