We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Top 5 Stocks Poised to Beat Earnings Estimates This Month
Read MoreHide Full Article
We are in the last leg of the second-quarter 2022 reporting cycle. Market participants have keenly watched this earnings season as it has provided the most descriptive view of U.S. corporate health amid record-high inflation and an extremely hawkish Fed. So far, earnings results have come in better than expected, with no visible sign of an imminent recession.
Here, we have selected five companies that are slated to report earnings results this month. The combination of a favorable Zacks Rank and a possible earnings beat should drive their share prices. These companies are — Ulta Beauty Inc. (ULTA - Free Report) , Dollar General Corp. (DG - Free Report) , Dollar Tree Inc. (DLTR - Free Report) , Hewlett Packard Enterprise Co. (HPE - Free Report) and Chewy Inc. (CHWY - Free Report) .
Better-Than-Expected Q2 Earnings Results
As of Aug 17, 469 companies within the S&P 500 Index have reported their financial numbers. Total earnings of these companies are up 7.7% year over year on 14.5% higher revenues, with 77.2% beating EPS estimates and 68.4% beating revenue estimates.
Our latest projection is that for the second quarter as a whole, total earnings of the S&P 500 Index will rise 6.7% year over year on 14% higher revenues and net margin compression of 0.86%. These show a notable improvement over 2.1% growth in earnings year over year on 9.7% higher revenues and net margin compression of 0.95% estimated at the beginning of the reporting cycle.
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 their 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
Dollar General remains a compelling growth story in the retail space. Thanks to its value-creating initiatives, defensive product mix and real estate growth strategy, DG has the capabilities to gain market share. Its commitment to better pricing, private label offerings, effective inventory management and merchandise initiative should drive sales.
We also remain encouraged by Dollar General’s host of initiatives such as DG Fresh, Fast Track, non-consumables, digitization and private fleet that should yield same-store sales growth and margin expansion. We expect same-store sales to increase 3.5% and 3% in fiscal 2022 and 2023, respectively.
DG has an Earnings ESP of +1.04%. It has an expected earnings growth rate of 13.6% for the current year (ending January 2023). The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 30 days.
Dollar General recorded earnings surprises in the last four reported quarters, with an average beat of 2.8%. The company is set to release earnings results on Aug 25, before the opening bell.
Dollar Tree has benefited from the completion of the $1.25 multi-price point initiative at the Dollar Tree stores, as well as robust margins, despite the increase in freight costs and SG&A expenses.
Following the robust first-quarter fiscal 2022 performance, DLTR raised its guidance for fiscal 2022 and provided a decent second-quarter view. In first-quarter fiscal 2022, Dollar Tree reported the tenth straight quarter of earnings beat.
DLTR has an Earnings ESP of +1.75%. It has an expected earnings growth rate of 40.7% for the current year (ending January 2023). The Zacks Consensus Estimate for current-year earnings improved 0.1% over the last 7 days.
Dollar Tree recorded earnings surprises in the last four reported quarters, with an average beat of 13.1%. The company is set to release earnings results on Aug 25, before the opening bell.
Ulta Beauty has been benefiting from its omnichannel strength. Also, the skincare category has been gaining from consumers’ rising interest in self-care. ULTA’s solid performance was backed by the strong execution of its strategies and solid guest demand, with the latter gaining from exciting brand launches.
Also, increased in-person activities and travel have been leading to the revival of the beauty category demand. All major categories delivered double-digit comp sales growth. Encouragingly, Ulta Beauty raised its fiscal 2022 view.
ULTA has an Earnings ESP of +4.07%. The Zacks Consensus Estimate for current-year earnings improved 0.5% over the last 7 days. Ulta Beauty recorded earnings surprises in the last four reported quarters, with an average beat of 49.8%. The company is set to release earnings results on Aug 25, after the closing bell.
Hewlett Packard Enterprise is benefiting from strong executions in clearing backlogs and increasing customer acceptance. HPE’s efforts to shift focus to higher margin offerings are aiding its bottom-line results. Additionally, HPE’s target of saving at least $800 million annually by fiscal 2022-end through cost optimization plan is a positive.
Moreover, Hewlett Packard Enterprise’s multi-billion-dollar investment plan across expanding networking capabilities will help diversify business from server and hardware storage markets, and boost margins over the long run.
HPE has an Earnings ESP of +1.05%. It has an expected earnings growth rate of 3.1% for the current year (ending October 2022). Hewlett Packard Enterprise recorded earnings surprises in three out of the last four reported quarters, with an average beat of 7.8%. The company is set to release earnings results on Aug 30, after the closing bell.
Chewy engages in the pure play e-commerce business in the United States. CHWY provides pet food and treats, pet supplies and pet medications, and other pet-health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its www.chewy.com retail Website, as well as its mobile applications.
CHWY has an Earnings ESP of +1.03%. Chewy recorded earnings surprises in two out of the last four reported quarters, with an average beat of 4.1%. The company is set to release earnings results on Aug 30, after the closing bell.
Image: Bigstock
Top 5 Stocks Poised to Beat Earnings Estimates This Month
We are in the last leg of the second-quarter 2022 reporting cycle. Market participants have keenly watched this earnings season as it has provided the most descriptive view of U.S. corporate health amid record-high inflation and an extremely hawkish Fed. So far, earnings results have come in better than expected, with no visible sign of an imminent recession.
Here, we have selected five companies that are slated to report earnings results this month. The combination of a favorable Zacks Rank and a possible earnings beat should drive their share prices. These companies are — Ulta Beauty Inc. (ULTA - Free Report) , Dollar General Corp. (DG - Free Report) , Dollar Tree Inc. (DLTR - Free Report) , Hewlett Packard Enterprise Co. (HPE - Free Report) and Chewy Inc. (CHWY - Free Report) .
Better-Than-Expected Q2 Earnings Results
As of Aug 17, 469 companies within the S&P 500 Index have reported their financial numbers. Total earnings of these companies are up 7.7% year over year on 14.5% higher revenues, with 77.2% beating EPS estimates and 68.4% beating revenue estimates.
Our latest projection is that for the second quarter as a whole, total earnings of the S&P 500 Index will rise 6.7% year over year on 14% higher revenues and net margin compression of 0.86%. These show a notable improvement over 2.1% growth in earnings year over year on 9.7% higher revenues and net margin compression of 0.95% estimated at the beginning of the reporting cycle.
Our Top Picks
Five companies are slated to beat earnings estimates this month. 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 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 their 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
Dollar General remains a compelling growth story in the retail space. Thanks to its value-creating initiatives, defensive product mix and real estate growth strategy, DG has the capabilities to gain market share. Its commitment to better pricing, private label offerings, effective inventory management and merchandise initiative should drive sales.
We also remain encouraged by Dollar General’s host of initiatives such as DG Fresh, Fast Track, non-consumables, digitization and private fleet that should yield same-store sales growth and margin expansion. We expect same-store sales to increase 3.5% and 3% in fiscal 2022 and 2023, respectively.
DG has an Earnings ESP of +1.04%. It has an expected earnings growth rate of 13.6% for the current year (ending January 2023). The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 30 days.
Dollar General recorded earnings surprises in the last four reported quarters, with an average beat of 2.8%. The company is set to release earnings results on Aug 25, before the opening bell.
Dollar Tree has benefited from the completion of the $1.25 multi-price point initiative at the Dollar Tree stores, as well as robust margins, despite the increase in freight costs and SG&A expenses.
Following the robust first-quarter fiscal 2022 performance, DLTR raised its guidance for fiscal 2022 and provided a decent second-quarter view. In first-quarter fiscal 2022, Dollar Tree reported the tenth straight quarter of earnings beat.
DLTR has an Earnings ESP of +1.75%. It has an expected earnings growth rate of 40.7% for the current year (ending January 2023). The Zacks Consensus Estimate for current-year earnings improved 0.1% over the last 7 days.
Dollar Tree recorded earnings surprises in the last four reported quarters, with an average beat of 13.1%. The company is set to release earnings results on Aug 25, before the opening bell.
Ulta Beauty has been benefiting from its omnichannel strength. Also, the skincare category has been gaining from consumers’ rising interest in self-care. ULTA’s solid performance was backed by the strong execution of its strategies and solid guest demand, with the latter gaining from exciting brand launches.
Also, increased in-person activities and travel have been leading to the revival of the beauty category demand. All major categories delivered double-digit comp sales growth. Encouragingly, Ulta Beauty raised its fiscal 2022 view.
ULTA has an Earnings ESP of +4.07%. The Zacks Consensus Estimate for current-year earnings improved 0.5% over the last 7 days. Ulta Beauty recorded earnings surprises in the last four reported quarters, with an average beat of 49.8%. The company is set to release earnings results on Aug 25, after the closing bell.
Hewlett Packard Enterprise is benefiting from strong executions in clearing backlogs and increasing customer acceptance. HPE’s efforts to shift focus to higher margin offerings are aiding its bottom-line results. Additionally, HPE’s target of saving at least $800 million annually by fiscal 2022-end through cost optimization plan is a positive.
Moreover, Hewlett Packard Enterprise’s multi-billion-dollar investment plan across expanding networking capabilities will help diversify business from server and hardware storage markets, and boost margins over the long run.
HPE has an Earnings ESP of +1.05%. It has an expected earnings growth rate of 3.1% for the current year (ending October 2022). Hewlett Packard Enterprise recorded earnings surprises in three out of the last four reported quarters, with an average beat of 7.8%. The company is set to release earnings results on Aug 30, after the closing bell.
Chewy engages in the pure play e-commerce business in the United States. CHWY provides pet food and treats, pet supplies and pet medications, and other pet-health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its www.chewy.com retail Website, as well as its mobile applications.
CHWY has an Earnings ESP of +1.03%. Chewy recorded earnings surprises in two out of the last four reported quarters, with an average beat of 4.1%. The company is set to release earnings results on Aug 30, after the closing bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.