We are in the last round of the coronavirus-stricken second-quarter 2020 earnings season. The results are rather disappointing so far, in line with expectations as lockdowns were in place for the maximum part of last quarter.
However, expectations for second-quarter earnings as a whole, have improved to some extent from what they were at the beginning of the reporting cycle. Meanwhile, five large-cap (market capital > $10 billion) companies are set to beat earnings estimates this month.
Q2 Earnings Expectations Improve to Some Extent
As of Aug 7, 445 S&P 500 members reported second-quarter 2020 earnings results. Total earnings of these companies are down 34.8% from the same period last year on 10.9% lower revenues. Of the total, 80.2% surpassed EPS estimates and 63.1% outpaced revenue estimates.
Overall, second-quarter earnings for the S&P 500 Index are projected to be down 34.9% year over year on 9.3% lower revenues. This is an improvement over a year-over-year decline of 44.8% in earnings on 10.7% lower revenues. Notably, first-quarter earnings of companies on the S&P 500 Index were down 13.5% on 1.4% higher revenues. (Read More: Making Sense of the Earnings Picture)
Our Top Picks
We have narrowed down our search to five large-cap stocks slated to report earnings results this month. 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 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are expected to soar after 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.
JD.com Inc. (JD – Free Report) operates as an e-commerce company and retail infrastructure service provider in the People’s Republic of China. It operates in two segments, JD Retail and New Businesses. The company has an Earnings ESP of +13.79%.
JD.com has an expected earnings growth rate of 20.2% for the current year. It has a trailing four-quarter earnings surprise of 114%, on average. The company will release its earnings report on Aug 17, before the opening bell.
Agilent Technologies Inc. (A – Free Report) is an original equipment manufacturer of a broad-based portfolio of test and measurement products serving multiple end markets. The company has an Earnings ESP of +5%.
Agilent Technologies has an expected earnings growth rate of 0.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days. It has a trailing four-quarter earnings surprise of 7.9%, on average. The company will release its earnings on Aug 18, after the closing bell.
Nordson Corp. (NDSN – Free Report) engineers, manufactures, and markets products and systems to dispense, apply, and control adhesives, coatings, polymers, sealants, biomaterials, and other fluids worldwide.
The company has an Earnings ESP of +6.06% for third-quarter fiscal 2020 (ended July). The Zacks Consensus Estimate for Nordson’s current-year earnings has improved 0.4% over the last 30 days. The company will release its earnings report on Aug 19, after the closing bell.
Deere & Co. (DE – Free Report) manufactures and distributes farm equipment worldwide. The company operates through three segments: Agriculture and Turf, Construction and Forestry, and Financial Services. The company has an Earnings ESP of +4.64% for third-quarter fiscal 2020 (ended July).
The Zacks Consensus Estimate for Deere’s current-year earnings has improved 2.3% over the last 30 days. It has a trailing four-quarter earnings surprise of 11%, on average. The company will release its earnings report on Aug 21, before the opening bell.
Dollar General Corp. (DG – Free Report) is one of the largest discount retailers in the United States. It trades in low-priced merchandise typically $10 or less offering a wide consumable items, seasonal items, home products and apparel. The company has an Earnings ESP of +2.90% for second-quarter fiscal 2020 (ended July).
Dollar General has an expected earnings growth rate of 32% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 30 days. It has a trailing four-quarter earnings surprise of 16.9%, on average. The company will come up with its earnings report on Aug 27, before the opening bell.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year’s 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Author: Nalak Das
Source: Zacks: Buy 5 Large-Cap Stocks Ahead of Earnings Results This Month