Yahoo Finance Buy These 5 Stocks Ahead of Earnings Releases This Week
We are in the second half of the first-quarter 2023 earnings season. The results have so far turned out better than expected on the back of warnings of a recession later this year by a large section of economists and financial experts.
In line with this trend, we have selected five stocks with a favorable Zacks Rank that are set to beat on earnings this week. The combination of a favorable Zacks Rank with a possible earnings beat is likely to drive stock prices in the near term.
Q1 Earnings Results So Far
As of May 3, 343 companies on the S&P 500 Index have reported their quarterly financial numbers. Total earnings of these companies are down 1.6% year over year on 4.1% higher revenues. Further, 77.6% of companies have surpassed earnings estimates while 74.3% have surpassed revenue estimates.
Moreover, 61.5% of these 343 companies have beaten both earnings and revenue estimates, marking the highest beats percentage of these companies as a whole since first-quarter 2022 and above the 20-quarter average of 58.9%.
Our projection has shown that total earnings of the S&P 500 Index are set to decline 5.1% year over year on 3.5% higher revenues compared with a 10% year-over-year decline in earnings on 1.7% higher revenues, estimated at the beginning of the reporting cycle. This will follow a 5.4% year-over-year decline in earnings of the S&P 500 Index on 5.9% higher revenues in fourth-quarter 2022.
This earnings season is likely to witness the fifth consecutive quarter of a year-over-year decline in net margins of the S&P 500 Index. However, the aggregate net margin is likely to decline 1.07% year over year in first-quarter 2023 compared with a drop of 1.47% estimated at the beginning of the reporting cycle. This will follow a 1.38% year-over-year decline in fourth-quarter 2022 and a 1.22% decrease in third-quarter 2022.
Our Top Picks
We have narrowed our search to five stocks that are set to report earnings results this week. Each of these stocks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank 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 releases. 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
Booking Holdings Inc. BKNG is benefiting from a substantial improvement in its booking trends. Solid growth in domestic bookings is contributing well. Further, BKNG is experiencing solid momentum in international regions, which is a positive. Strong growth in rental car, airline ticket units and booked room nights is another positive.
Also, solid momentum across the agency, merchant, and advertising and other businesses is a tailwind for BKNG. Our estimates suggest that agency, merchant, and advertising and other revenues would see a year-over-year rise of 2.3%, 18.7% and 8.2%, respectively, in 2023. Further, strengthening alternative accommodation business and flight capabilities are major positives.
Zacks Rank #2 Booking Holdings has an Earnings ESP of +14.55%. It has an expected earnings growth rate of 31.2% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.6% over the last 30 days.
Booking Holdings recorded earnings surprises in the last four reported quarters, with an average beat of 729.8%. BKNG is set to release earnings results on May 4, after the closing bell.
Insulet Corp. PODD benefited fourth-quarter 2022 from record quarterly U.S. and international Omnipod new customer starts. This was driven mainly by a strong start to PODD’s U.S. full market release of the Omnipod 5 automated insulin delivery system. PODD recently achieved milestones of 360,000 estimated active global customers using the Omnipod System.
Zacks Rank #1 Insulet has an Earnings ESP of +70.21%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.8% over the last seven days.
Insulet recorded earnings surprises in three out of the last four reported quarters, with an average beat of 59.8%. PODD is set to release earnings results on May 4, after the closing bell.
BILL Holdings Inc. BILL provides cloud-based software that simplifies, digitizes, and automates back-office financial operations for small and midsize businesses worldwide. BILL provides software-as-a-service, cloud-based payments, and spend management products, which allow users to automate accounts payable and accounts receivable transactions.
BILL enable users to connect with their suppliers and/or customers to do business, eliminate expense reports, manage cash flows, and improve office efficiency. It also offers onboarding implementation support, and ongoing support and training services. BILL serves accounting firms, financial institutions, and software companies.
Zacks Rank #2 BILL Holdings has an Earnings ESP of +13.02%. It has an expected earnings growth rate of more than 100% for the current year (ending June 2023). The Zacks Consensus Estimate for current-year earnings improved more than 100% over the last 90 days.
BILL Holdings recorded earnings surprises in the last four reported quarters, with an average beat of 120.8%. BILL is set to release earnings results on May 4, after the closing bell.
Americold Realty Trust Inc. COLD is a real estate investment trust. COLD owns and operates temperature-controlled warehouses. COLD operates primarily in the United States, Australia, New Zealand, Argentina and Canada.
Zacks Rank #2 Americold Realty Trust has an Earnings ESP of +17.72%. It has an expected earnings growth rate of 7.2% for the current year. COLD recorded earnings surprises in the last four reported quarters, with an average beat of 8.1%. Americold Realty Trust is set to release earnings results on May 4, after the closing bell.
Johnson Controls International plc JCI is engaged in engineering, manufacturing, commissioning, and retrofitting building products and systems in the United States, Europe, the Asia Pacific, and internationally. JCI operates in four segments: Building Solutions North America, Building Solutions EMEA/LA, Building Solutions Asia Pacific, and Global Products.
JCI mainly designs, sells, installs, and services heating, ventilating, air conditioning, controls, building management, refrigeration, integrated electronic security, integrated fire detection and suppression systems, and fire protection and security products for commercial, industrial, retail, small business, institutional, and governmental customers.
Zacks Rank #2 Johnson Controls has an Earnings ESP of +1.02%. It has an expected earnings growth rate of 16.3% for the current year (ending September 2023). The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 30 days.
Johnson Controls recorded earnings surprises in the last four reported quarters, with an average beat of 0.7%. JCI is set to release earnings results on May 5, before the opening bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Johnson Controls International plc (JCI) : Free Stock Analysis Report
Insulet Corporation (PODD) : Free Stock Analysis Report
Americold Realty Trust Inc. (COLD) : Free Stock Analysis Report
Booking Holdings Inc. (BKNG) : Free Stock Analysis Report
BILL Holdings, Inc. (BILL) : Free Stock Analysis Report
