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The first-quarter 2024 earnings season will kick off this week, with the banking sector slated to report numbers. There has been a deceleration in the earnings outlook in recent months, with negative revisions for several key sectors since the start of the first quarter.
While most of the stocks are expected to outperform this earnings season, we have zeroed in on the best stocks of the sectors that have a high chance of surprising in their upcoming releases. These stocks — Meta Platforms (META - Free Report) , Chipotle Mexican Grill (CMG - Free Report) , Walt Disney Company (DIS - Free Report) , Consolidated Edison Inc. (ED - Free Report) and S&P Global Inc. (SPGI - Free Report) — could make great plays as the earnings season unfolds and will likely move higher in the days to come.
Q1 Earnings Trend
Total S&P 500 earnings are expected to be up 2.2% from the same period last year on 3.4% higher revenues, per the latest Earnings Trends. This would follow 6.8% earnings growth in the fourth quarter on 3.9% higher revenues. Though estimates have steadily come down since the quarter began, the magnitude of cuts compared favorably with the recent periods. In fact, estimates have come down for 10 of the 16 Zacks sectors.
Of the 16 Zacks sectors, eight are expected to post earnings growth in the first quarter, with the Technology sector (19.4%) recording the strongest gain. It would be followed by Retail (13.5%), Consumer Discretionary (11.2%), Utilities (5.8%) and Business Services (5.9%).
How to Choose Stocks?
An earnings beat will definitely inspire investors’ confidence and propel the price of these stocks higher. Picking the star performers would be easy if we go by our proprietary methodology that selects stocks with a combination of a positive Earnings ESP and a favorable Zacks Rank — Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst revisions. This is done because if an analyst reevaluates their estimate right before an earnings release, it means that they have fresh information that could potentially be more accurate than what analysts thought about a company two or three months ago.
Stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 or better produced an earnings surprise 70% of the time. Best of all, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10-year backtest. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Technology
Meta Platforms is the world’s largest social media platform. The company’s portfolio evolved from a single app, Facebook, to multiple apps like photo and video sharing app Instagram and messaging app WhatsApp owing to acquisitions. It has an Earnings ESP of +4.05% and a Zacks Rank #2. The Zacks Consensus Estimate for the yet-to-be-reported quarter has been revised upward by a couple of cents to $4.29 over the past seven days, implying growth of 62.5%.
Meta Platforms delivered an earnings surprise of 19.71% on average in the last four quarters. It is scheduled to report earnings on Apr 24 after market close.
Retail
Chipotle Mexican, together with its subsidiaries, operates quick-casual and fresh Mexican food restaurant chains. It has an Earnings ESP of +1.44% and a Zacks Rank #3. Chipotle Mexican saw a positive earnings estimate revision of a penny over the past 30 days for the yet-to-be-reported quarter, indicating growth of 8.3%.
Chipotle Mexican delivered an average earnings surprise of 9.11% in the past four quarters. The company is slated to release earnings on Apr 24.
Consumer Discretionary
Disney operates as an entertainment company worldwide with assets spanning movies, television shows and theme parks. It has an Earnings ESP of +2.83% and a Zacks Rank #2.
In the past month, the stock has seen a positive earnings estimate revision of 5 cents for the yet-to-be-reported quarter and has an expected growth rate of 16.1%. Disney delivered an earnings surprise of 14.17% for the past four quarters on average and is slated to release earnings on May 8.
Utilities
Consolidated Edison, also known as ConEd, is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. It has an Earnings ESP of +2.02% and a Zacks Rank #3. The stock has seen an upward earnings estimate revision of a couple of cents over the past month for the to-be-reported quarter and has an expected earnings growth rate of 8.20%.
Consolidated Edison delivered an average earnings surprise of 5.68% for the last four quarters. The company is slated to release earnings on May 2.
Business Services
S&P Global is a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. It has an Earnings ESP of +7.66% and a Zacks Rank #3.
S&P Global saw a positive earnings estimate revision of a penny for the yet-to-be-reported quarter in the past month and has an expected growth rate of 9.84%. It delivered an earnings surprise of 3.13%, on average, for the past four quarters. S&P Global is slated to release earnings on Apr 25.
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5 Solid Stocks to Bet On This Earnings Season
The first-quarter 2024 earnings season will kick off this week, with the banking sector slated to report numbers. There has been a deceleration in the earnings outlook in recent months, with negative revisions for several key sectors since the start of the first quarter.
While most of the stocks are expected to outperform this earnings season, we have zeroed in on the best stocks of the sectors that have a high chance of surprising in their upcoming releases. These stocks — Meta Platforms (META - Free Report) , Chipotle Mexican Grill (CMG - Free Report) , Walt Disney Company (DIS - Free Report) , Consolidated Edison Inc. (ED - Free Report) and S&P Global Inc. (SPGI - Free Report) — could make great plays as the earnings season unfolds and will likely move higher in the days to come.
Q1 Earnings Trend
Total S&P 500 earnings are expected to be up 2.2% from the same period last year on 3.4% higher revenues, per the latest Earnings Trends. This would follow 6.8% earnings growth in the fourth quarter on 3.9% higher revenues. Though estimates have steadily come down since the quarter began, the magnitude of cuts compared favorably with the recent periods. In fact, estimates have come down for 10 of the 16 Zacks sectors.
Of the 16 Zacks sectors, eight are expected to post earnings growth in the first quarter, with the Technology sector (19.4%) recording the strongest gain. It would be followed by Retail (13.5%), Consumer Discretionary (11.2%), Utilities (5.8%) and Business Services (5.9%).
How to Choose Stocks?
An earnings beat will definitely inspire investors’ confidence and propel the price of these stocks higher. Picking the star performers would be easy if we go by our proprietary methodology that selects stocks with a combination of a positive Earnings ESP and a favorable Zacks Rank — Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst revisions. This is done because if an analyst reevaluates their estimate right before an earnings release, it means that they have fresh information that could potentially be more accurate than what analysts thought about a company two or three months ago.
Stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 or better produced an earnings surprise 70% of the time. Best of all, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10-year backtest. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Technology
Meta Platforms is the world’s largest social media platform. The company’s portfolio evolved from a single app, Facebook, to multiple apps like photo and video sharing app Instagram and messaging app WhatsApp owing to acquisitions. It has an Earnings ESP of +4.05% and a Zacks Rank #2. The Zacks Consensus Estimate for the yet-to-be-reported quarter has been revised upward by a couple of cents to $4.29 over the past seven days, implying growth of 62.5%.
Meta Platforms delivered an earnings surprise of 19.71% on average in the last four quarters. It is scheduled to report earnings on Apr 24 after market close.
Retail
Chipotle Mexican, together with its subsidiaries, operates quick-casual and fresh Mexican food restaurant chains. It has an Earnings ESP of +1.44% and a Zacks Rank #3. Chipotle Mexican saw a positive earnings estimate revision of a penny over the past 30 days for the yet-to-be-reported quarter, indicating growth of 8.3%.
Chipotle Mexican delivered an average earnings surprise of 9.11% in the past four quarters. The company is slated to release earnings on Apr 24.
Consumer Discretionary
Disney operates as an entertainment company worldwide with assets spanning movies, television shows and theme parks. It has an Earnings ESP of +2.83% and a Zacks Rank #2.
In the past month, the stock has seen a positive earnings estimate revision of 5 cents for the yet-to-be-reported quarter and has an expected growth rate of 16.1%. Disney delivered an earnings surprise of 14.17% for the past four quarters on average and is slated to release earnings on May 8.
Utilities
Consolidated Edison, also known as ConEd, is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. It has an Earnings ESP of +2.02% and a Zacks Rank #3. The stock has seen an upward earnings estimate revision of a couple of cents over the past month for the to-be-reported quarter and has an expected earnings growth rate of 8.20%.
Consolidated Edison delivered an average earnings surprise of 5.68% for the last four quarters. The company is slated to release earnings on May 2.
Business Services
S&P Global is a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. It has an Earnings ESP of +7.66% and a Zacks Rank #3.
S&P Global saw a positive earnings estimate revision of a penny for the yet-to-be-reported quarter in the past month and has an expected growth rate of 9.84%. It delivered an earnings surprise of 3.13%, on average, for the past four quarters. S&P Global is slated to release earnings on Apr 25.