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5 Must-Buy Corporate Giants Set to Beat on Earnings Tomorrow

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Wall Street had a dream run in 2019 wherein all three major stock indexes, predominantly comprising large-cap stocks, witnessed best yearly performances in six years. Moreover, fourth-quarter 2019 earnings trends have been showing steady improvement.

Although corporate earnings growth was negative year over year in the first three quarters of last year, fourth-quarter results have been faring better than initially anticipated.

Here we represent five corporate behemoths with favorable Zacks Rank that are poised to beat fourth-quarter 2019 earnings estimates tomorrow (Feb 13, 2020).

Fourth-Quarter at a Glance

The final three months of last year were quite promising as the U.S.-China trade war finally showed signs of shimmering down and strong economic data boosted investor sentiments. Moreover, the Fed’s timely intervention and accommodative monetary policy helped the economy, especially the sagging U.S. housing market to recover with a low mortgage rate.

The U.S. economy is on a stable footing. In the fourth quarter, the GDP grew at 2.1%, the economy grew 2.3% in 2019. Strong consumer spending (constituting 70% of GDP), robust labor market with a historically low-level of unemployment, steady growth in wage rate and housing-market revival are likely to get reflected in fourth-quarter earnings results.

Better-Than-Expected Fourth-Quarter Earnings So Far

Fourth-quarter 2019 earnings results have been improving significantly. In fact, overall earnings expectations have rebounded and are in positive territory. As of Feb 7, 323 S&P 500 members reported fourth-quarter earnings results. Total earnings of these companies are up 0.3% from the same period last year on 4% higher revenues. Of the total, 72.1% surpassed EPS estimates while 67.8% outpaced revenue estimates.

Overall, fourth-quarter 2019 earnings for the S&P 500 Index were projected to be up 0.6% year over year on 4.2% higher revenues. This suggests a complete turnaround from earnings decline of 3.2% year over year on 3.5% higher revenues, projected at the beginning of the reporting cycle. (Read More: 3 Things to Know About the Q4 Earnings Season)

5 Large-Cap Stocks Poised to Beat on Q4 Earnings

We have narrowed down our search to five large-cap companies that are gearing up to release their earnings results tomorrow. Each of these stocks has a Zacks Rank #2 (Buy) and 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 expected to soar after 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 three months.

 

Waste Management Inc. (WM - Free Report) provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America. The company has an Earnings ESP of +2.90%.

Waste Management has an expected earnings growth rate of 6.4% for the current year. The Zacks Consensus Estimate for the current year has improved 0.2% over the last 30 days. It has a trailing four-quarter positive earnings surprise of 3.8%, on average.

TC Energy Corp. (TRP - Free Report) operates as an energy infrastructure company in North America. It operates through Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines and Power and Storage segments. The company has an Earnings ESP of +0.65%.

TC Energy has an expected earnings growth rate of 0.9% for the current year. The Zacks Consensus Estimate for the current year has improved 1% over the last 30 days. It has a trailing four-quarter positive earnings surprise of 5.2%, on average.

Duke Energy Corp. (DUK - Free Report) operates as an energy company in the United States. It operates through three segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The company has an Earnings ESP of +0.38%.

Duke Energy has an expected earnings growth rate of 2.3% for the current year. The Zacks Consensus Estimate for the current year has improved 0.8% over the last 30 days. It has a trailing four-quarter positive earnings surprise of 4.3%, on average.

DexCom Inc. (DXCM - Free Report) is a medical device company, focuses on the design, development and commercialization of continuous glucose monitoring systems in the United States and internationally. The company has an Earnings ESP of +12.27%.

DexCom has an expected earnings growth rate of 24.9% for the current year. The Zacks Consensus Estimate for the current year has improved 4.1% over the last 30 days. It has a trailing four-quarter positive earnings surprise of 189.7%, on average.

Republic Services Inc. (RSG - Free Report) provides non-hazardous solid waste collection, transfer, recycling, disposal and energy services for small-container, large-container, municipal and residential and energy services customers in the United States and Puerto Rico. The company has an Earnings ESP of +2.67%.

Republic Services has an expected earnings growth rate of 5.4% for the current year. The Zacks Consensus Estimate for the current year has improved 0.6% over the last 30 days. It has a trailing four-quarter positive earnings surprise of 3.1%, on average.

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