This week's earnings lineup will feature a flurry of prominent companies reporting their third quarter results.
Set to release their Q3 reports on Tuesday, October 29, Alphabet GOOGL, Crocs CROX, and Royal Caribbean Cruises RCL are three noteworthy names to watch as their stocks sport a Zacks Rank #2 (Buy).
The Most Undervalued Magnificent Seven Stock - GOOGL
Arguably the most undervalued of the Magnificent Seven-themed tech stocks, Wall Street will be watching Alphabet’s Q3 results closely. Despite regulatory concerns prompted by Google Search being viewed as a monopoly, Alphabet’s growth trajectory remains compelling.
Alphabet has a plethora of other successful businesses that should keep its outlook intact including its reach as a cloud provider and portfolio of lucrative acquisitions like YouTube. Alphabet’s top and bottom lines are thought to have expanded by doubt digits during Q3 with GOOGL trading at a very reasonable 21.6X forward earnings multiple.
This is the cheapest forward P/E valuation of the Mag 7 tech giants, as GOOGL trades beneath Meta Platforms' META 26.7X and Apple’s AAPL 30.8X.
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Crocs Blazing Footwear & Apparel Growth - CROX
Exceeding the Zacks EPS Consensus for 17 consecutive quarters, Crocs impressive streak of topping earnings expectations could continue.
Crocs Q3 EPS is thought to have decreased 3% to $3.13 but the Zacks ESP (Expected Surprise Prediction) indicates the footwear and apparel leader could surprise again with the Most Accurate Estimate at $3.15 per share and slightly above the Zacks Consensus.
Like Alphabet, lucrative acquisitions such as acquiring the popular Heydude brand have extended Crocs' spectacular growth story. To that point, fiscal 2024 EPS projections of $12.91 would reflect a 700% increase from pre-pandemic earnings of $1.61 a share in 2019. Plus, full-year sales forecast of $4.14 billion would reflect a 236% post-pandemic increase with 2019 sales at $1.23 billion.
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Royal Caribbean is the Cruise Industry’s Leader - RCL
Last but not least, on Tuesday investors will get Q3 results from one of the world’s largest cruise companies in Royal Caribbean.
Separating Royal Caribbean from many of its industry peers is the leisure and recreation services leaders' operating performance.
Continuing a sharp post-pandemic rebound, Royal Caribbean’s Q3 EPS is projected to spike 31% to $5.04 versus $3.85 per share in the comparative quarter (Current Qtr below). Quarterly sales projections of $4.86 billion would be a 17% spike from Q3 2023.
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Magnifying Royal Caribbean’s attractive outlook for FY24 and FY25 is that RCL currently trades at 17.3X forward earnings with its price-to-sales ratio (P/S) of 3.1X being near the optimum level of less than 2X.
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Bottom Line
Having impressive streaks of surpassing quarterly earnings expectations, Alphabet, Crocs, and Royal Caribbean are certainly three of the most intriguing stocks to watch this week. Furthermore, earnings estimate revisions for FY24 and FY25 have trended higher for these prominent companies which suggests now is a good time to invest in CROX,GOOGL, and RCL.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
