Top 5 S&P 500 Giants Set to Beat on Q1 Earnings Next Week

We are in the initial stage of the first-quarter 2024 earnings season, and the results are so far in line with expectations. Meanwhile, several S&P 500 behemoths are set to beat on earnings next week. A few of them currently carry a favorable Zacks Rank. The combination of a favorable Zacks Rank and an earnings beat should drive their stock prices in the near term.

S&P 500 in Q1 at a Glance

U.S. stock markets witnessed an astonishing rally in the past 15 months. The S&P 500 — popularly known as Wall Street’s broad-market index — rallied 10.2% in first-quarter 2024 after jumping 23.9% in 2023. Notably, last quarter was its strongest first-quarter performance since 2019. The benchmark recorded 22 all-time highs in the last quarter.

The rally since the beginning of 2023 was led by a massive thrust toward artificial intelligence (AI), especially generative AI. The rapid penetration of digital technologies and the Internet worldwide during the lockdown period, ushered in significant adoption of AI.

Wall Street’s bull run in the first quarter got an added boost from the Fed’s multiple rate cuts signal, to the surprise of a large section of financial pandits, who indiscriminately warned of overvaluation.

Meanwhile, several S&P 500 behemoths are set to beat on earnings next week. A few of them currently carry a favorable Zacks Rank. The combination of a favorable Zacks Rank and an earnings beat should drive their stock prices in the near term.

Our Top Picks

We have narrowed our search to five S&P 500 bigwigs that are poised to beat on earnings results next week. Each of these stocks carries a Zacks Rank #2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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 release. 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.

Zacks Investment Research
Image Source: Zacks Investment Research

Meta Platforms Inc. META is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased engagement with its offerings like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver. META is leveraging AI to recommend Reels content, which is driving traffic on Instagram and Facebook.

META’s innovative portfolio, which includes Threads, Reels, Llama 2 and Ray-Ban Meta smart glass, and mixed reality device Quest 3, is likely to aid growth. Reels continue to do very well across Instagram and Facebook. People reshared Reels 3.5 billion times every day during the fourth quarter of 2023.

Meta Platforms has an Earnings ESP of +0.62%. It has an expected earnings growth rate of 35.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last seven days.

Meta Platforms recorded earnings surprises in the last four reported quarters, with an average beat of 19.7%. The company is set to release earnings results on Apr 24, after the closing bell.

General Motors Co.’s GM compelling electric vehicle (EV) and internal combustion engine portfolio displays strong demand for its quality pickups and SUVs. GM retained the U.S. auto sales crown in 2023. Its massive EV push is commendable.

GM plans to roll out 30 fresh EV models by 2025-end. General Motors’ Ultium Drive system and battery plants in Ohio, Tennessee and Lansing are likely to scale up its e-mobility prowess. GM is on track to deliver on its $2 billion net cost reduction program by 2024 end. Its superior liquidity profile and investor-friendly moves bode well.

General Motors has an Earnings ESP of +7.77%. It has an expected earnings growth rate of 18.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last seven days.

General Motors recorded earnings surprises in the last four reported quarters, with an average beat of 20%. The company is set to release earnings results on Apr 23, before the opening bell.

United Rentals Inc. URI is benefiting from sustained demand in its end markets and the strength of its core rental business. During the fourth-quarter 2023, rental revenues increased 13.5% from the year-ago quarter to $3.12 billion. Given the strength of the present market condition, URI has provided strong guidance for 2024.

For 2024, URI expects total revenues in the range of $14.65-$15.15 billion, up from $14.332 billion reported a year ago. URI sees multi-year tailwinds across infrastructure, energy, power and manufacturing.

United Rentals has an Earnings ESP of +2.32%. It has an expected earnings growth rate of 5.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last seven days.

United Rentals recorded earnings surprises in three out of the last four reported quarters, with an average beat of 3.1%. The company is set to release earnings results on Apr 24, after the closing bell.

Hess Corp.’s HES two primary production engines are the Bakken shale and the Stabroek project offshore Guyana. In particular, HES has achieved numerous world-class oil findings in the Stabroek Block, accounting for more than 11 billion barrels of oil equivalent (Boe) in recoverable resources.

Moving onto HES’ Bakken shale play, the exploration & production firm possesses numerous premium untapped drilling locations. HES’ announced buyout by Chevron is also a great transaction for shareholders, as they realize a premium and become part of a supermajor.

Hess has an Earnings ESP of +10.21%. It has an expected earnings growth rate of 60.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the last seven days.

Hess recorded earnings surprises in the last four reported quarters, with an average beat of 17.5%. The company is set to release earnings results on Apr 25, before the opening bell.

Valero Energy Corp. VLO is a premier refining player with presence across North America and the Caribbean. VLO’s diverse network favors robust refining margins, utilizing cost-effective crude for over half its needs.

VLO is focused on returning capital to shareholders through dividends and share buybacks. The demand for VLO’s distillate fuel is poised to increase from the new sulfur regulation standard set by the International Maritime Organization.

Valero Energy has an Earnings ESP of +26.07%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days. Valero Energy recorded earnings surprises in the last four reported quarters, with an average beat of 10.7%. The company is set to release earnings results on Apr 25, before the opening bell.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Hess Corporation (HES) : Free Stock Analysis Report

Valero Energy Corporation (VLO) : Free Stock Analysis Report

General Motors Company (GM) : Free Stock Analysis Report

United Rentals, Inc. (URI) : Free Stock Analysis Report

Meta Platforms, Inc. (META) : 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.

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