Markets

5 Stocks with an Incredible Earnings Season History

Though the first quarter of 2015 brought good tidings for the broader market with year-over-year earnings growth, the improvement was short lived with back-to-back earnings declines in the remaining three quarters of the year. The persistent oil price weakness was one of the major factors behind the underperformance. Adding to the woes, the negative earnings trend is expected to continue through the first half of this year with growth unlikely before late 2016.

Factors Behind the Negative Earnings Trend

In order to better understand the earnings trend in the market, let us analyze the stocks included in the Standard & Poor's 500 Index (S&P 500). Going by the quarterly performances last year, the S&P 500 witnessed earnings declines of 2.2%, 2.6% and 6.4% in the second, third and fourth quarters, respectively, after increasing by 3% during the first quarter.

The results posted in the last four earnings seasons show the Oil/Energy sector at its weakest. Lackluster earnings figures hurt the overall growth picture of the S&P 500 index. Data-wise, the Oil/Energy sector witnessed earnings declines of 54.7%, 60.3%, 56.2% and 77.5% in the first, second, third and fourth quarters of 2015, respectively. A supply glut in the face of lackluster global demand led to further deterioration in crude prices. Moreover, a stronger dollar made the greenback-priced crude costlier for investors with foreign currency. The turmoil in Greece, Iran and China added to the pressure.

Hence, the overall market condition remained bleak as growth was stunted by a slowing global economy, a strong U.S. dollar, and weakness in oil and other commodity sectors.

To add to the woes, first-quarter 2016 total earnings of the S&P 500 components are now expected to decrease 9.3% from the prior-year quarter.

5 Stocks with Solid Earnings Performances

In spite of the depressing overall earnings picture, some stocks were able to weather the storm and report impressive results. We have picked five such stocks using our Zacks screening methodology. These stocks not only have a Zacks Rank #1 (Strong Buy) or 2 (Buy) but have also maintained an average EPS Surprise of 50% or more over the last four quarters.

ABIOMED Inc. ABMD : Headquartered in Danvers, MA and founded in 1981, ABIOMED is engaged in developing, manufacturing and marketing medical products that are designed to assist or replace the pumping function of the failing heart.

ABIOMED sports a Zacks Rank #1 and has an average positive earnings surprise of 89.5% for the last four quarters.

Antero Resources Corporation AR : Denver, CO-based Antero Resources is primarily involved in the exploration and development of oil and natural gas resources located in the U.S. Currently, the company sports a Zacks Rank #1 and has an average positive earnings surprise of 218% for the last four quarters.

Activision Blizzard Inc. ATVI : Headquartered in Santa Monica, CA, the company is mainly engaged in activities like publishing online and console games. Presently, the company sports a Zacks Rank #1 and has an average positive earnings surprise of 122.4% for the last four quarters.

SanDisk Corp. SNDK : SanDisk is the largest supplier of NAND flash storage cards for data storage in a compact removable format. The storage cards manufactured by the company are used in digital cameras, multimedia cellular phones, USB flash drives, gaming devices, laptop computers, personal computers, audio players and video players. Flash storage technology makes data storage compact and enables accessibility even after the power has been turned off.

The company holds a Zacks Rank #2. The stock has an average positive earnings surprise of 63.6% over the last four quarters.

Frontier Communications Corporation FTR : Based in Stamford, CT, Frontier Communications provides its services to rural areas as well as small and medium-sized towns and cities. Frontier offers voice, high-speed Internet, satellite video, wireless Internet data access, data security solutions, bundled offerings, specialized bundles for small businesses and home offices, and advanced business communications access solutions for medium and large businesses.

The company also holds a Zacks Rank #2 and has an average positive earnings surprise of 164.2% over the last four quarters.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ABIOMED INC (ABMD): Free Stock Analysis Report

ACTIVISION BLZD (ATVI): Free Stock Analysis Report

FRONTIER COMMUN (FTR): Free Stock Analysis Report

SANDISK CORP (SNDK): Free Stock Analysis Report

ANTERO RESOURCE (AR): Free Stock Analysis Report

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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