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5 Momentum Stocks to Buy Ahead of Earnings Results
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We are in the initial stage of the fourth-quarter 2023 earnings season. The results so far have shown stability, mostly in line with expectations. The earnings results and management guidance will be crucial for market participants to gauge the health of the U.S. economy.
Q4 Earnings So Far
As of Jan 19, 52 companies on the S&P 500 Index have reported their financial numbers. Total earnings for these 52 index members are up 1.4% from the same period last year on 4.8% higher revenues, with 80.8% beating EPS estimates and 63.5% beating revenue estimates.
At present, total earnings of the S&P 500 Index in fourth-quarter 2024 are expected to be up 0.3% on 2.2% higher revenues. This follows the 3.8% earnings growth on 2% higher revenues in the third quarter and three back-to-back quarters of declining earnings before that.
Q4 2024 At a Glance
The last quarter was an impressive one for Wall Street. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — rallied 13.6%, 12.5% and 11.2%, respectively.
Market participants’ confidence in risky assets like equities was boosted as the Fed indicated in its December FOMC meeting that the interest rate-hike regime might have come to an end, and rate cuts could be expected as early as first-quarter 2024. U.S. stock markets regained momentum after a brief halt from August to October.
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 release. 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 past month.
Image Source: Zacks Investment Research
Franklin Resources Inc. (BEN - Free Report) has been benefiting from strategic acquisitions, which have expanded its investment platforms and increased assets under management (AUM). In fact, the acquisition of Putnam in January 2024 is expected to propel BEN’s defined contribution AUM to more than $100 billion.
We expect AUM to reflect a CAGR of 9.1% by fiscal 2026. BEN’s solid distribution platform and first-mover advantage in several countries aid the top line. We expect revenues to reflect a CAGR of 1.7% by fiscal 2026.
Franklin Resources has an Earnings ESP of +2.85%. The Zacks Consensus Estimate for current-year (ending September 2024) earnings has improved 1.6% over the last seven days. BEN recorded earnings surprises in three out of the last four reported quarters, with an average beat of 11.6%. The company is set to release earnings results on Jan 29, before the opening bell.
Novo Nordisk A/S (NVO - Free Report) is a global healthcare company and a leader in the worldwide diabetes market with a full portfolio of GLP-1 receptor agonists, modern insulins and human insulins. NVO is also a key player in hemophilia care, growth hormone therapy, hormone replacement therapy and obesity. NVO operates through two segments: Diabetes and obesity care and Rare diseases.
Novo Nordisk has an Earnings ESP of +0.89%. It has an expected earnings growth rate of 23.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the last seven days.
Novo Nordisk recorded earnings surprises in three out of the last four reported quarters, with an average beat of 0.6%. The company is set to release earnings results on Jan 31, before the opening bell.
Copa Holdings S.A. (CPA - Free Report) is benefiting from upbeat air-travel demand. Management expects current-year load factor (percentage of seats filled by passengers) to be 87%, assuming the rosy traffic scenario to continue.
For 2023, CPA suggests consolidated capacity or available seat miles to register 13% growth year over year. Operating margin is projected to be at 23%. The carrier’s fleet modernization efforts also look encouraging. CPA anticipates to end 2023 with 106 aircraft.
Copa Holdings has an Earnings ESP of +1.47%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last seven days. CPA recorded earnings surprises in the last four reported quarters, with an average beat of 16.8%. The company is set to release earnings results on Feb 7, after the closing bell.
Carpenter Technology Corp.’s (CRS - Free Report) backlog grew 5% on a sequential basis and 32% year over year in the first quarter of fiscal 2024, marking the 11th consecutive quarter of backlog growth. CRS’ fiscal 2024 results are expected to reflect the impacts of the ongoing momentum across its end-use markets.
CRS’ financial position has been strong, providing it with the flexibility to invest in the emerging technologies of additive manufacturing and soft magnetics. Carpenter Technology’s cost-reduction initiatives are also anticipated to boost its margins. CRS’ portfolio realignments are expected to deliver savings. Backed by record backlog levels, CRS’ near and long-term outlooks for each end-use market remain positive.
Carpenter Technology has an Earnings ESP of +0.88%. It has an expected earnings growth rate of more than 100% for the current year (ending June 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days.
Carpenter Technology recorded earnings surprises in the last four reported quarters, with an average beat of 14.3%. The company is set to release earnings results on Jan 25, before the opening bell.
Janus Henderson Group plc (JHG - Free Report) is an asset management holding entity. JHG provides services to institutional, retail, and high-net-worth clients. JHG manages separate client-focused equity and fixed-income portfolios. Janus Henderson Group also manages equity, fixed-income, and balanced mutual funds for its clients. JHG invests in public equity and fixed income markets, as well as in real estate and private equity.
Janus Henderson Group has an Earnings ESP of +3.57%. It has an expected earnings growth rate of 6.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.4% over the last seven days.
Janus Henderson Group recorded earnings surprises in the last four reported quarters, with an average beat of 21.1%. The company is set to release earnings results on Feb 1, before the opening bell.
Image: Shutterstock
5 Momentum Stocks to Buy Ahead of Earnings Results
We are in the initial stage of the fourth-quarter 2023 earnings season. The results so far have shown stability, mostly in line with expectations. The earnings results and management guidance will be crucial for market participants to gauge the health of the U.S. economy.
Q4 Earnings So Far
As of Jan 19, 52 companies on the S&P 500 Index have reported their financial numbers. Total earnings for these 52 index members are up 1.4% from the same period last year on 4.8% higher revenues, with 80.8% beating EPS estimates and 63.5% beating revenue estimates.
At present, total earnings of the S&P 500 Index in fourth-quarter 2024 are expected to be up 0.3% on 2.2% higher revenues. This follows the 3.8% earnings growth on 2% higher revenues in the third quarter and three back-to-back quarters of declining earnings before that.
Q4 2024 At a Glance
The last quarter was an impressive one for Wall Street. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — rallied 13.6%, 12.5% and 11.2%, respectively.
Market participants’ confidence in risky assets like equities was boosted as the Fed indicated in its December FOMC meeting that the interest rate-hike regime might have come to an end, and rate cuts could be expected as early as first-quarter 2024. U.S. stock markets regained momentum after a brief halt from August to October.
Our Top Picks
We have narrowed our search to five momentum stocks that are poised to beat on earnings results next week. Each of these stocks sports 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. These stocks also carry a Momentum Score A or B.
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 release. 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 past month.
Image Source: Zacks Investment Research
Franklin Resources Inc. (BEN - Free Report) has been benefiting from strategic acquisitions, which have expanded its investment platforms and increased assets under management (AUM). In fact, the acquisition of Putnam in January 2024 is expected to propel BEN’s defined contribution AUM to more than $100 billion.
We expect AUM to reflect a CAGR of 9.1% by fiscal 2026. BEN’s solid distribution platform and first-mover advantage in several countries aid the top line. We expect revenues to reflect a CAGR of 1.7% by fiscal 2026.
Franklin Resources has an Earnings ESP of +2.85%. The Zacks Consensus Estimate for current-year (ending September 2024) earnings has improved 1.6% over the last seven days. BEN recorded earnings surprises in three out of the last four reported quarters, with an average beat of 11.6%. The company is set to release earnings results on Jan 29, before the opening bell.
Novo Nordisk A/S (NVO - Free Report) is a global healthcare company and a leader in the worldwide diabetes market with a full portfolio of GLP-1 receptor agonists, modern insulins and human insulins. NVO is also a key player in hemophilia care, growth hormone therapy, hormone replacement therapy and obesity. NVO operates through two segments: Diabetes and obesity care and Rare diseases.
Novo Nordisk has an Earnings ESP of +0.89%. It has an expected earnings growth rate of 23.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the last seven days.
Novo Nordisk recorded earnings surprises in three out of the last four reported quarters, with an average beat of 0.6%. The company is set to release earnings results on Jan 31, before the opening bell.
Copa Holdings S.A. (CPA - Free Report) is benefiting from upbeat air-travel demand. Management expects current-year load factor (percentage of seats filled by passengers) to be 87%, assuming the rosy traffic scenario to continue.
For 2023, CPA suggests consolidated capacity or available seat miles to register 13% growth year over year. Operating margin is projected to be at 23%. The carrier’s fleet modernization efforts also look encouraging. CPA anticipates to end 2023 with 106 aircraft.
Copa Holdings has an Earnings ESP of +1.47%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last seven days. CPA recorded earnings surprises in the last four reported quarters, with an average beat of 16.8%. The company is set to release earnings results on Feb 7, after the closing bell.
Carpenter Technology Corp.’s (CRS - Free Report) backlog grew 5% on a sequential basis and 32% year over year in the first quarter of fiscal 2024, marking the 11th consecutive quarter of backlog growth. CRS’ fiscal 2024 results are expected to reflect the impacts of the ongoing momentum across its end-use markets.
CRS’ financial position has been strong, providing it with the flexibility to invest in the emerging technologies of additive manufacturing and soft magnetics. Carpenter Technology’s cost-reduction initiatives are also anticipated to boost its margins. CRS’ portfolio realignments are expected to deliver savings. Backed by record backlog levels, CRS’ near and long-term outlooks for each end-use market remain positive.
Carpenter Technology has an Earnings ESP of +0.88%. It has an expected earnings growth rate of more than 100% for the current year (ending June 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days.
Carpenter Technology recorded earnings surprises in the last four reported quarters, with an average beat of 14.3%. The company is set to release earnings results on Jan 25, before the opening bell.
Janus Henderson Group plc (JHG - Free Report) is an asset management holding entity. JHG provides services to institutional, retail, and high-net-worth clients. JHG manages separate client-focused equity and fixed-income portfolios. Janus Henderson Group also manages equity, fixed-income, and balanced mutual funds for its clients. JHG invests in public equity and fixed income markets, as well as in real estate and private equity.
Janus Henderson Group has an Earnings ESP of +3.57%. It has an expected earnings growth rate of 6.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.4% over the last seven days.
Janus Henderson Group recorded earnings surprises in the last four reported quarters, with an average beat of 21.1%. The company is set to release earnings results on Feb 1, before the opening bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.