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3 Stocks To Buy Ahead of Q3 Earnings: PYPL, AXP, ETFC

Benjamin Rains
Updated
Bank earnings helped kick off the busy part of third-quarter earnings seasons late last week. The week of October 15 is also chock-full of major earnings reports from giants like Netflix (NFLX) and Morgan Stanley (MS). With that said, let's look at three other companies that seem like buys ahead of their quarterly earnings releases later this week.

Bank earnings helped kick off the busy part of third-quarter earnings season late last week. The week of October 15 is also chock-full of major earnings reports from giants like Netflix NFLX and Morgan Stanley MS. With that said, let’s look at three other companies that seem like buys ahead of their quarterly earnings releases later this week.

Earnings Season Overview

JPMorgan JPM, Wells Fargo WFC, and Citigroup C began Q3 earnings season with a bang last week. The three banking giants saw their combined earnings jump 16.1% on 3.4% higher revenues. Since then, fellow finance sector powers, Bank of America BAC, Goldman Sachs GS, and Morgan Stanley posted strong quarterly performances.

Bank of America’s third-quarter profit surged 32% on the back of higher interest rates. Morgan Stanley and Goldman’s quarterly profits jumped 20% and 19%, respectively. Overall, total Q3 earnings are projected to jump 18.7% for S&P 500 companies, based on our current Zacks Estimates. Plus, revenues are expected to climb 7.8%, with double-digit earnings growth projected for 10 out of the 16 Zacks sectors (also read: Banks Provide Positive Start to Q3 Earnings Season).

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Now that we have a better understanding of the full Q3 earnings picture, it’s time to dive into three stocks that look like they might be worth buying ahead of the release of their third-quarter financial results.

PayPal PYPL

PayPal, which spun off from eBay EBAY in 2015, boasts 244 million active account holders in roughly 200 markets. The fintech powerhouse has completed a series of acquisitions recently that will help it better compete in a changing financial environment against Square SQ and others.

Our current Zacks Consensus Estimate is calling for PayPal’s Q3 revenues to pop by 13.2% to reach $3.67 billion. At the bottom end of the income statement, PayPal’s adjusted quarterly earnings are projected to jump by roughly 17.4% to hit $0.54 per share.

PayPal is currently a Zacks Rank #1 (Strong Buy) based on its recent positive long-term earnings revision trends for fiscal 2018 and 2019. Plus, PYPL has topped our quarterly earnings estimates in six straight quarters.

PayPal is scheduled to release its Q3 financial results after the market closes on Thursday, October 18.

American Express AXP

The credit card firm is coming off a quarter that saw its revenues jumped roughly 9%, while card member spending climbed 10%. American Express also acquired 2.9 million new cards last quarter. Looking ahead, American Express’ Q3 revenues are projected to surge 18.9% to reach $10.03 billion.

Similarly, at the other end of the income statement, AXP’s adjusted third-quarter earnings are projected to climb 18.7% to hit $1.78 per share. American Express has also seen its earnings estimates climb for Q3, Q4, and fiscal 2018 and 2019 over the last 30 days, on the back of positive earnings estimate revision activity.

This movement helps American Express earn a Zacks Rank #2 (Buy). Plus, AXP sports a “B” grade for Value in our Style Scores system. American has also beat our quarterly earnings estimates in six straight periods.

American Express is expected to report its quarterly financial results after the market closes Thursday.

E*TRADE Financial ETFC

E*TRADE is a financial services company that offers brokerage and banking products, among other things. The firm’s Q2 revenues jumped 23% and it completed its acquisition of Trust Company of America. Plus, E*TRADE’s top line is projected to pop by 19.4% in the third quarter to reach $715.24 million.

Investors should be even more pleased to see that the company’s adjusted quarterly earnings are projected to skyrocket nearly 51% to reach $0.83 per share. Meanwhile, it adjusted full-year EPS figure is expected to soar over 65%. It is also worth noting that the company has earned four upward earnings estimate revisions for Q3 and five for fiscal 2018 over the last 30 days, with 100% agreement to the upside.  

E*TRADE is currently a Zacks Rank #2 (Buy) and has beat quarterly earnings estimates in the trailing 12 quarters. ETFC is set to report its third quarter 2018 earnings results after the market closes Thursday.

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Citigroup Inc. (C) : Free Stock Analysis Report
 
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
Bank of America Corporation (BAC) : Free Stock Analysis Report
 
Wells Fargo & Company (WFC) : Free Stock Analysis Report
 
eBay Inc. (EBAY) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
Square, Inc. (SQ) : Free Stock Analysis Report
 
PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
 
E*TRADE Financial Corporation (ETFC) : Free Stock Analysis Report
 
Morgan Stanley (MS) : Free Stock Analysis Report
 
The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
 
American Express Company (AXP) : Free Stock Analysis Report
 
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