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4 Big-Name Stocks to Buy on Blockbuster Q2 Earnings
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Trump’ economy is in good shape with the tax overhaul policy providing the much-needed wherewithal to corporates. U.S. companies are expected to see one of the strongest second-quarter earnings seasons in almost a decade, with gains likely to be broad-based. Second-quarter earnings for the S&P 500 companies are estimated to improve 20.4% from the same period last year on 8.3% higher revenues (read more: Q2 Likely to Show Strongest Earnings Since 2010: Top 6 Picks).
The earnings season, thus, has undoubtedly started on a solid note with decent performances across the table. Total earnings for the 48 S&P 500 members that have reported results so far are up 23% on 10% higher revenues, with 89.6% beating EPS estimates and 83.3% trumping revenue estimates.
These 48 companies have, in fact, put up a better show compared to other recent periods. EPS estimates and revenue surprises, in particular, have been far better than the first quarter, the average of the prior four quarter and last 12 quarters well (read more: Positive Start to Q2 Earnings Season).
Let us, thus, take a look at four of the best stocks from the ones that have reported so far. These stocks have performed remarkably well this earnings season and are poised to scale north on solid fundamentals. Here, we should bear in mind that better-than-expected earnings performances generally lead to a rally in the share price.
M&T Bank
M&T Bank Corporation’s (MTB - Free Report) second-quarter earnings of $3.29 per share beat the Zacks Consensus Estimate of $3.17. Compared to year=ago levels, the bottom line improved 38%. In addition to this, revenues of $1.47 billion came ahead of the Zacks Consensus Estimate of $1.46 billion. It also compared favorably with the year-ago figure of $1.41 billion. Improvement in the bank’s credit quality, in fact, was one of the major improvements. Provision for credit losses shrunk 33% on a year-over-year basis to $35 million (read more: M&T Bank Q2 Earnings and Revenues Beat, Expenses Up).
The provider of retail and commercial banking services further expects its sturdy business model and strategic acquisitions to help maintain its winning run in the near term. To top it, in the last 60 days, eight earnings estimates moved north, while none moved south for the current year. The Zacks Consensus Estimate for earnings rose 0.6% in the same period.
If this wasn’t enough, M&T Bank carries a Zacks Rank #2 (Buy) and a VGM Score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
The company’s projected earnings growth rate, by the way, for the current year is 34.7% compared with the Banks - Major Regional industry’s estimated rally of 25.8%. The stock has also outperformed the broader industry in the past year (+7.4% vs +1.6%).
UnitedHealth
Diversified health care company, UnitedHealth Group Incorporated’s (UNH - Free Report) second-quarter 2018 earnings of $3.14 per share surpassed the Zacks Consensus Estimate of $3.03. Also, the reported figure was up 28% year over year. Even though revenues of 56.1 billion were in line with the Zacks Consensus Estimate, the figure improved 12% year over year.
Strength in UnitedHealthcare and Optum segments as well as membership growth led to the outperformance. These factors are also expected to help the company gain traction in the near future. As a result, UnitedHealth now expects 2018 net earnings per share of $11.80 to $12.05, up from the earlier projection of $11.70 to $11.95 (read more: UnitedHealth’s Q2 Earnings Beat, 2018 Guidance Up).
To top it, in the last 60 days, three earnings estimates moved up, while none moved down for the current year. The Zacks Consensus Estimate for earnings rose 0.2% in the same period.
UnitedHealth boast a Zacks Rank #2 and VGM Score of A. The company’s projected earnings growth rate for the current year is 25.4% compared with the Medical - HMOs industry’s estimated rally of 23.5%. The stock has also outpaced the broader industry in the last one-year period (+35% vs +18.6%).
CSX Corporation
CSX Corporation (CSX - Free Report) reported second-quarter earnings per share of $1.01 that beat the consensus mark of 86 cents. The bottom line, moreover, soared 57.8% year over year on lower costs and a slashed tax rate.
Revenues, in the meantime, came in at $3,102 million that surpassed the Zacks Consensus Estimate of $2,988.1 million and increased 5.8% year over year. Revenues improved on higher fuel recoveries and strong core pricing gains across all major markets. The company has, thus, raised its full-year guidance for revenues (read more: CSX Q2 Earnings Top Estimates on Lower Costs & Solid Pricing).
Additionally, seven earnings estimates moved north in the last 60 days, while none moved south for the current year. The Zacks Consensus Estimate for earnings rose 1.9% in the same period.
The company’s projected earnings growth rate for the current year is 43.5% compared with the Transportation - Rail industry’s projected rally of 20.4%. The stock has also outperformed the broader industry in the past year (+33% vs +5.2%).
W.W. Grainger
W.W. Grainger, Inc.’s (GWW - Free Report) second-quarter earnings per share of $4.37 improved 9% year over year. Earnings also trumped the Zacks Consensus Estimate by 16%. Revenues of $2,860 million beat the Zacks Consensus Estimate of $2,820 million and were up 9% from the prior-year quarter. Lower tax cut was cited to be one of the primary catalysts that helped the distributor of maintenance, repair, and operating (MRO) supplies come up with such a stellar performance.
Chairman and CEO DG Macpherson said that “we continue to gain share across both large and medium customers and acquire medium customers amid a strong economy.” He added that “the single channel and international businesses also improved operating performance.”
Backed by these encouraging outcomes, Grainger raised 2018 sales and earnings per share guidance. The company now expects sales to be up 5.5-8.5% compared with the prior guidance of 5-8%. The outlook for earnings per share is now at $15.05-$16.05, up from the prior band of $14.30-$15.30 (read more: Grainger Q2 Earnings & Sales Beat, Hikes 2018 View).
Further, in the last one week, one earnings estimate moved north, while none moved south for the current year. The Zacks Consensus Estimate for earnings rose 0.3% in the same period.
Grainger has a Zacks Rank #2 and a VGM Score of B. The company’s projected earnings growth rate for the current year is 30.5% compared with the Industrial Services industry’s estimated rally of 26.8%. The stock has also outpaced the broader industry in a year’s time (+109% vs -4.7%).
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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4 Big-Name Stocks to Buy on Blockbuster Q2 Earnings
Trump’ economy is in good shape with the tax overhaul policy providing the much-needed wherewithal to corporates. U.S. companies are expected to see one of the strongest second-quarter earnings seasons in almost a decade, with gains likely to be broad-based. Second-quarter earnings for the S&P 500 companies are estimated to improve 20.4% from the same period last year on 8.3% higher revenues (read more: Q2 Likely to Show Strongest Earnings Since 2010: Top 6 Picks).
The earnings season, thus, has undoubtedly started on a solid note with decent performances across the table. Total earnings for the 48 S&P 500 members that have reported results so far are up 23% on 10% higher revenues, with 89.6% beating EPS estimates and 83.3% trumping revenue estimates.
These 48 companies have, in fact, put up a better show compared to other recent periods. EPS estimates and revenue surprises, in particular, have been far better than the first quarter, the average of the prior four quarter and last 12 quarters well (read more: Positive Start to Q2 Earnings Season).
Let us, thus, take a look at four of the best stocks from the ones that have reported so far. These stocks have performed remarkably well this earnings season and are poised to scale north on solid fundamentals. Here, we should bear in mind that better-than-expected earnings performances generally lead to a rally in the share price.
M&T Bank
M&T Bank Corporation’s (MTB - Free Report) second-quarter earnings of $3.29 per share beat the Zacks Consensus Estimate of $3.17. Compared to year=ago levels, the bottom line improved 38%. In addition to this, revenues of $1.47 billion came ahead of the Zacks Consensus Estimate of $1.46 billion. It also compared favorably with the year-ago figure of $1.41 billion. Improvement in the bank’s credit quality, in fact, was one of the major improvements. Provision for credit losses shrunk 33% on a year-over-year basis to $35 million (read more: M&T Bank Q2 Earnings and Revenues Beat, Expenses Up).
The provider of retail and commercial banking services further expects its sturdy business model and strategic acquisitions to help maintain its winning run in the near term. To top it, in the last 60 days, eight earnings estimates moved north, while none moved south for the current year. The Zacks Consensus Estimate for earnings rose 0.6% in the same period.
If this wasn’t enough, M&T Bank carries a Zacks Rank #2 (Buy) and a VGM Score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
The company’s projected earnings growth rate, by the way, for the current year is 34.7% compared with the Banks - Major Regional industry’s estimated rally of 25.8%. The stock has also outperformed the broader industry in the past year (+7.4% vs +1.6%).
UnitedHealth
Diversified health care company, UnitedHealth Group Incorporated’s (UNH - Free Report) second-quarter 2018 earnings of $3.14 per share surpassed the Zacks Consensus Estimate of $3.03. Also, the reported figure was up 28% year over year. Even though revenues of 56.1 billion were in line with the Zacks Consensus Estimate, the figure improved 12% year over year.
Strength in UnitedHealthcare and Optum segments as well as membership growth led to the outperformance. These factors are also expected to help the company gain traction in the near future. As a result, UnitedHealth now expects 2018 net earnings per share of $11.80 to $12.05, up from the earlier projection of $11.70 to $11.95 (read more: UnitedHealth’s Q2 Earnings Beat, 2018 Guidance Up).
To top it, in the last 60 days, three earnings estimates moved up, while none moved down for the current year. The Zacks Consensus Estimate for earnings rose 0.2% in the same period.
UnitedHealth boast a Zacks Rank #2 and VGM Score of A. The company’s projected earnings growth rate for the current year is 25.4% compared with the Medical - HMOs industry’s estimated rally of 23.5%. The stock has also outpaced the broader industry in the last one-year period (+35% vs +18.6%).
CSX Corporation
CSX Corporation (CSX - Free Report) reported second-quarter earnings per share of $1.01 that beat the consensus mark of 86 cents. The bottom line, moreover, soared 57.8% year over year on lower costs and a slashed tax rate.
Revenues, in the meantime, came in at $3,102 million that surpassed the Zacks Consensus Estimate of $2,988.1 million and increased 5.8% year over year. Revenues improved on higher fuel recoveries and strong core pricing gains across all major markets. The company has, thus, raised its full-year guidance for revenues (read more: CSX Q2 Earnings Top Estimates on Lower Costs & Solid Pricing).
Additionally, seven earnings estimates moved north in the last 60 days, while none moved south for the current year. The Zacks Consensus Estimate for earnings rose 1.9% in the same period.
CSX flaunts a Zacks Rank #1 and a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company’s projected earnings growth rate for the current year is 43.5% compared with the Transportation - Rail industry’s projected rally of 20.4%. The stock has also outperformed the broader industry in the past year (+33% vs +5.2%).
W.W. Grainger
W.W. Grainger, Inc.’s (GWW - Free Report) second-quarter earnings per share of $4.37 improved 9% year over year. Earnings also trumped the Zacks Consensus Estimate by 16%. Revenues of $2,860 million beat the Zacks Consensus Estimate of $2,820 million and were up 9% from the prior-year quarter. Lower tax cut was cited to be one of the primary catalysts that helped the distributor of maintenance, repair, and operating (MRO) supplies come up with such a stellar performance.
Chairman and CEO DG Macpherson said that “we continue to gain share across both large and medium customers and acquire medium customers amid a strong economy.” He added that “the single channel and international businesses also improved operating performance.”
Backed by these encouraging outcomes, Grainger raised 2018 sales and earnings per share guidance. The company now expects sales to be up 5.5-8.5% compared with the prior guidance of 5-8%. The outlook for earnings per share is now at $15.05-$16.05, up from the prior band of $14.30-$15.30 (read more: Grainger Q2 Earnings & Sales Beat, Hikes 2018 View).
Further, in the last one week, one earnings estimate moved north, while none moved south for the current year. The Zacks Consensus Estimate for earnings rose 0.3% in the same period.
Grainger has a Zacks Rank #2 and a VGM Score of B. The company’s projected earnings growth rate for the current year is 30.5% compared with the Industrial Services industry’s estimated rally of 26.8%. The stock has also outpaced the broader industry in a year’s time (+109% vs -4.7%).
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>