Top SP500 Companies Always Beating Profit Forecasts
January 15 2020 - Ten Big Stocks Keep Beating Profit Forecasts By A Mile By Investors Business Daily
Some S&P 500 companies are routinely beating quarterly profit forecasts by a mile — making them key stocks to watch as quarterly earnings kick off.
Ten S&P 500 companies, including real estate leader Prologis (PLD) and information tech winners Salesforce.com (CRM) and Ansys (ANSS), routinely blow away analysts' quarterly earnings forecasts. These stocks all beat the Street's quarterly profit forecasts by 12% or more in each of the past four quarters. That's according to an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
Seeing better-than-expected quarterly profit is exactly what investors want during earnings season. The fact these companies can pull off beating views so routinely and definitively makes them stand out.
And earnings beats will be especially critical as companies report fourth-quarter results.
A Big Week For Earnings (And Surprises)
More than 20 S&P 500 companies are expected to report fourth-quarter results this week, says Bespoke Investment Group. That includes many of the giant financials like Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WFC).
And it's not supposed to be an entirely positive reporting period. Analysts are now calling for S&P 500 earnings to drop 2% during the fourth quarter, says Sam Stovall, chief market strategist at CFRA.
If correct, that would mark an earnings recession. It would be the second-straight quarter of lower earnings. An earnings recession is often seen as an early warning of an economic recession.
But hopes are especially high that companies will beat the forecasts, as they have the past 31 quarters, Stovall says. S&P 500 companies have, on average, topped profit views by 3.8 percentage points. And if that were to happen again, S&P 500 earnings will be up 2%.
It'll take some big upside surprises for this to happen.
Prologis: King Of S&P 500 Upside Surprises
Prologis, an operator of high-tech warehouses used in e-commerce, keeps blowing away estimates more than any other S&P 500 company. It's also one of IBD's 50 Best ESG (environmental, social and governance issues) Companies.
The company beat quarterly profit forecasts in each of the past four quarters. Sometimes by incredible amounts. For instance, in the fourth quarter of 2018, the company earned 94 cents a share. That topped analysts' profit forecast by 185%.
And it's not just a lucky quarter. Prologis beat profit estimates by 42%, 82% and 57% in the past three quarters, respectively. All told, the company beat profit forecasts by an average of 91% the past four quarters.
Strong earnings paired with a stock that's up 47% in a year explains Prologis' high 89 IBD Composite Rating. The company is expected to report 56% lower adjusted fourth quarter profit on Jan. 22. We'll see if it can beat the hurdle. S&P 500 Tech Stock Profit Surprises
Design software maker Ansys could make the blueprint for earnings surprises. It has topped earnings forecasts by an average of 25.9% in the past four quarters. Analysts, surprisingly, have low expectations for the fourth quarter of 2019. They think the company will report nearly 7% lower profit of $1.99 a share when it reports on Feb. 27.
But it's hard to rule out this company. Shares are up 71% the past year along with fast-growing earnings. Solid stock gains paired with robust fundamentals explain its high 93 IBD Composite Rating.
It's a similar story at fellow tech company, Salesforce.com. The sales automation software company topped views by an average of 33% the past four quarters. Analysts also have a low hurdle for the company to beat when it reports fourth quarter results on Feb. 26. Analysts think Salesforce will earn 56 cents a share in the fourth quarter, down 20% from the same year-ago period on Feb. 26. The stock carries a strong 98 IBD Composite Rating.
Will these S&P 500 companies in the above image beat profit forecasts so easily again? They definitely are teaching investors to expect them to.
Invest2Success Investment Stock Advisory Service
Free Trial - Receive daily low-risk high-reward SP500 NYSE Nasdaq buy-long and short-sell stock picks that are experiencing strong increasing and decreasing earnings, that include buy sell entry, stop-loss, take profit area price targets, and trade management information to your email inbox.
MotiveWave Trading Software Free Trial
Free Elliott Wave Training with a Purchase of the TracknTrade or MotiveWave Trading Software