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5 Must-Buy Large-Cap Stocks Ahead of Earnings This Month
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The fourth-quarter 2023 earnings results are so far mostly in line with expectations. As of Jan 24, 83 companies on the S&P 500 Index have reported their financial numbers. Total earnings for these 83 index members are up 0.9% from the same period last year on 3.9% higher revenues, with 78.3% beating EPS estimates and 65.1% beating revenue estimates.
At present, total earnings of the S&P 500 Index in fourth-quarter 2024 are expected to be up 0.6% on 2.3% 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.
Meanwhile, five large-cap (market capital > $10 billion) stocks with a favorable Zacks Rank are set to beat on earnings this month. The combination of a favorable Zacks Rank and a possible earnings beat should drive their stock prices in the near-term.
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 last quarter.
Image Source: Zacks Investment Research
Tyson Foods Inc. (TSN - Free Report) has been seeing market share leadership across most retail categories. Productivity initiatives based on procurement, logistics and digitalization are yielding. TSN is focused on efforts to expand into the international markets. Also, TSN is keen on returning shareholder wealth, which is evident from its 12th consecutive year of dividend hikes.
Tyson Foods has an Earnings ESP of +5.60%. It has an expected earnings growth rate of 72.4% for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the last seven days. Tyson Foods is set to release earnings results on Feb 5, before the opening bell.
Shopify Inc. (SHOP - Free Report) is benefiting from strong growth in the merchant base. SHOP has been focused on winning merchants regularly based on product offerings, including Shop Pay and Shop Pay Installments. The solid adoption of new merchant-friendly applications holds promise.
Partnerships with YouTube, Twitter, Facebook, Instagram, and Google are expected to expand SHOP’s merchant base. The divestiture of the logistics business to Flexport is likely to boost profitability going forward.
Shopify has an Earnings ESP of +1.02%. It has an expected earnings growth rate of 49.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days.
Shopify recorded earnings surprises in three out of the last four reported quarters, with an average beat of 106.1%. The company is set to release earnings results on Feb 13, before the opening bell.
Westinghouse Air Brake Technologies Corp. (WAB - Free Report) continues to benefit from solid growth across its Freight segment revenues. Segmental growth was backed by strength across all product lines, with solid growth in Equipment, Digital Electronics and Services.
For 2023, WAB now expects sales in the range of $9.50-$9.70 billion (prior view: $9.25-$9.50 billion). Adjusted earnings per share are now estimated to be between $5.80 and $6.00 (prior view: $5.50 and $5.80). For 2023, WAB anticipates strong cash flow generation with operating cash flow conversion exceeding 90%.
Westinghouse Air Brake Technologies has an Earnings ESP of +0.85%. It has an expected earnings growth rate of 12.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the last 30 days.
Westinghouse Air Brake Technologies recorded earnings surprises in the last four reported quarters, with an average beat of 7.1%. The company is set to release earnings results on Feb 14, before the opening bell.
Zillow Group Inc.’s (ZG - Free Report) growing user base and visitors are the primary factors that help it generate significant revenues. Improvement in rental revenues is being driven by growth in both multi and single-family listings of ZG. Drop in monthly mortgage payments and improvement in inventory levels will offer prospective buyers more breathing room.
These factors will likely drive higher home sales in the upcoming quarters. Strong growth in loan origination is a major tailwind for ZG. Focus on improving visual and multimodal AI capabilities, including more rich media content, will enhance the prospects for real estate agents.
Zillow Group has an Earnings ESP of +66.67%. It has an expected earnings growth rate of 32.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the last 30 days.
Zillow Group recorded earnings surprises in the last four reported quarters, with an average beat of 104.3%. The company is set to release earnings results on Feb 13, after the closing bell.
United States Steel Corp. (X - Free Report) is well-placed to benefit from the favorable steel market fundamentals. Healthy demand in major end markets is expected to drive X’s volumes. We expect a 3% increase in its shipment volumes in 2023. Actions to improve cost structure should also work in X’s favor.
The Big River investment has also reinforced X’s position in high-margin steel-end markets. The Phase 2 expansion will provide it greater exposure to the hot-rolled market. X will also benefit from its efforts to drive the mini-mill steelmaking advantage. X’s strong liquidity position will also allow it to meet its near-term debt obligations.
United States Steel has an Earnings ESP of +0.26%. The Zacks Consensus Estimate for current-year earnings has improved 6.5% over the last 30 days. United States Steel recorded earnings surprises in the last four reported quarters, with an average beat of 24.1%. The company is set to release earnings results on Feb 1, after the closing bell.
Image: Bigstock
5 Must-Buy Large-Cap Stocks Ahead of Earnings This Month
The fourth-quarter 2023 earnings results are so far mostly in line with expectations. As of Jan 24, 83 companies on the S&P 500 Index have reported their financial numbers. Total earnings for these 83 index members are up 0.9% from the same period last year on 3.9% higher revenues, with 78.3% beating EPS estimates and 65.1% beating revenue estimates.
At present, total earnings of the S&P 500 Index in fourth-quarter 2024 are expected to be up 0.6% on 2.3% 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.
Meanwhile, five large-cap (market capital > $10 billion) stocks with a favorable Zacks Rank are set to beat on earnings this month. The combination of a favorable Zacks Rank and a possible earnings beat should drive their stock prices in the near-term.
Our Top Picks
We have narrowed our search to five large-cap stocks that are poised to beat on earnings 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 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 last quarter.
Image Source: Zacks Investment Research
Tyson Foods Inc. (TSN - Free Report) has been seeing market share leadership across most retail categories. Productivity initiatives based on procurement, logistics and digitalization are yielding. TSN is focused on efforts to expand into the international markets. Also, TSN is keen on returning shareholder wealth, which is evident from its 12th consecutive year of dividend hikes.
Tyson Foods has an Earnings ESP of +5.60%. It has an expected earnings growth rate of 72.4% for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the last seven days. Tyson Foods is set to release earnings results on Feb 5, before the opening bell.
Shopify Inc. (SHOP - Free Report) is benefiting from strong growth in the merchant base. SHOP has been focused on winning merchants regularly based on product offerings, including Shop Pay and Shop Pay Installments. The solid adoption of new merchant-friendly applications holds promise.
Partnerships with YouTube, Twitter, Facebook, Instagram, and Google are expected to expand SHOP’s merchant base. The divestiture of the logistics business to Flexport is likely to boost profitability going forward.
Shopify has an Earnings ESP of +1.02%. It has an expected earnings growth rate of 49.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days.
Shopify recorded earnings surprises in three out of the last four reported quarters, with an average beat of 106.1%. The company is set to release earnings results on Feb 13, before the opening bell.
Westinghouse Air Brake Technologies Corp. (WAB - Free Report) continues to benefit from solid growth across its Freight segment revenues. Segmental growth was backed by strength across all product lines, with solid growth in Equipment, Digital Electronics and Services.
For 2023, WAB now expects sales in the range of $9.50-$9.70 billion (prior view: $9.25-$9.50 billion). Adjusted earnings per share are now estimated to be between $5.80 and $6.00 (prior view: $5.50 and $5.80). For 2023, WAB anticipates strong cash flow generation with operating cash flow conversion exceeding 90%.
Westinghouse Air Brake Technologies has an Earnings ESP of +0.85%. It has an expected earnings growth rate of 12.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the last 30 days.
Westinghouse Air Brake Technologies recorded earnings surprises in the last four reported quarters, with an average beat of 7.1%. The company is set to release earnings results on Feb 14, before the opening bell.
Zillow Group Inc.’s (ZG - Free Report) growing user base and visitors are the primary factors that help it generate significant revenues. Improvement in rental revenues is being driven by growth in both multi and single-family listings of ZG. Drop in monthly mortgage payments and improvement in inventory levels will offer prospective buyers more breathing room.
These factors will likely drive higher home sales in the upcoming quarters. Strong growth in loan origination is a major tailwind for ZG. Focus on improving visual and multimodal AI capabilities, including more rich media content, will enhance the prospects for real estate agents.
Zillow Group has an Earnings ESP of +66.67%. It has an expected earnings growth rate of 32.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the last 30 days.
Zillow Group recorded earnings surprises in the last four reported quarters, with an average beat of 104.3%. The company is set to release earnings results on Feb 13, after the closing bell.
United States Steel Corp. (X - Free Report) is well-placed to benefit from the favorable steel market fundamentals. Healthy demand in major end markets is expected to drive X’s volumes. We expect a 3% increase in its shipment volumes in 2023. Actions to improve cost structure should also work in X’s favor.
The Big River investment has also reinforced X’s position in high-margin steel-end markets. The Phase 2 expansion will provide it greater exposure to the hot-rolled market. X will also benefit from its efforts to drive the mini-mill steelmaking advantage. X’s strong liquidity position will also allow it to meet its near-term debt obligations.
United States Steel has an Earnings ESP of +0.26%. The Zacks Consensus Estimate for current-year earnings has improved 6.5% over the last 30 days. United States Steel recorded earnings surprises in the last four reported quarters, with an average beat of 24.1%. The company is set to release earnings results on Feb 1, after the closing bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.