4 Stocks to Win Big as Earnings Season Winds Down
For quite some time now, the corporate earnings, revenues and management outlook has been determining the course of the stock market. Market pundits had largely anticipated lackluster results, thanks to the U.S.-China trade war and fears of a global slowdown in the near term. By the way, steady rise in wages was also expected to aggravate margin pressure.
However, corporate earnings have been quite reassuring so far. So far, 451 S&P 500 companies or 90.2% of the index’s total membership have reported earnings. For these companies, earnings are up 0.7% from the same period last year on 5.1% higher revenues, with 75.6% beating earnings estimates and 57.4% trumping revenue estimates (read more: Making Sense of This Market).
Amid this encouraging scenario, let us take a look at some of the high-profile companies set to post encouraging results as the second-quarter earnings season draws to a close. Needless to say, upbeat results will surely lead to an uptick in the share price.
Retail giant Walmart Inc. WMT will announce its latest results on Aug 15, before market open. And investors are, no doubt, pinning hopes on the release. In its last quarter, Walmart’s profit margin had improved, sales increased and its Sam’s Club business saw record membership.
Walmart will be a winner in the reporting quarter as well, mostly due to its extensive store network and swift shift to digital channels. Walmart continues to diversify its supply chains, which should also bode well.
And even though the outlook for the retail sector is clouded by the trade tensions, we shouldn’t forget that consumer confidence continues to be near an all-time high. This means Walmart will continue to benefit from consumers’ well-being.
For the July quarter, Wall Street expects Walmart sales growth to $130.49 billion, from around $128 billion a year ago.
The Zacks Rank #2 (Buy) company has outperformed the broader Retail - Supermarkets industry so far this year (+15.2% vs +12.3%). You can see the complete list of today’s Zacks #1 Rank stocks here.
Omnichannel retail organization, Macy's, Inc. M is set to report earnings results on Aug 14, before market open. Not surprisingly, Macy’s shares took a beating as U.S.-China trade issues took a turn for the worse last week. But, CEO Jeff Gennette assured that tariffs won’t hurt Macy’s much. After all, Macy’s will be able to import most of its China-sourced winter-gear inventory before the tariffs go into effect.
Macy’s, by the way, has expressed confidence with regard to making the most of the critical back-to-school shopping season (read more: 5 Stocks to Play the Busy Back-to-School Shopping Season).
Macy’s is also benefitting from sustained focus on price optimization, inventory management, merchandise planning and private label offering. The Zacks Consensus Estimate, thus, calls for revenues of $5.63 billion, indicating a 1% rise from the year-ago quarter.
What’s more, the Zacks Rank #3 (Hold) company has an Earnings ESP of +0.73%, which increases the possibility of a positive surprise. This is Zacks’ proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Order growth in new markets, innovative prowess, product range and growth initiatives are likely to help Cisco Systems, Inc. CSCO come out with compelling earnings results on Aug 14, after market close.
In the third quarter of fiscal 2019, Cisco had issued its guidance for the fiscal fourth quarter. The company expects year-over-year revenue growth of up to 6.5%. The Zacks Consensus Estimate indicates revenues of $13.39 billion, higher than $12.84 billion reported a year ago.
The Zacks Rank #3 company currently has an Earnings ESP of +0.41%, while it expects current-year earnings growth of 18.5% against the Computer - Networking industry’s projected decline of 12.9%.
Tilray, Inc. TLRY, which engages in the research, cultivation, processing, and distribution of medical cannabis, is set to report earnings on Aug 13, after market close. From global marijuana legalization to the rapidly increasing use of CBD as a wellness product, all of this should help Tilray report promising numbers. Lest we forget, the United States had legalized hemp and hemp-related products last year, opening up opportunities for Canadian producers.
The Zacks Consensus Estimate calls for second-quarter sales growth of more than $40 million from the year-ago $9.7 million.
The Zacks Rank #3 company has outpaced the broader Medical - Drugs industry over the past year (+59.6% vs -16.1%).
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