The upcoming second-quarter earnings season is set to kick off with a bang as 124 companies in the S & P 500, nearly one-quarter of the benchmark’s constituents, are scheduled to release their financial results. Among them are seven components of the Dow Jones Industrial Average, making it a crucial week for investors to watch the market closely.
So far, the quarterly earnings have been exceeding expectations, with FactSet data revealing that 80% of the 61 companies in the S & P 500 that have already reported have beaten analyst earnings estimates. Additionally, 61% of these companies have posted a positive revenue surprise. FactSet’s projections indicate a blended year-over-year earnings growth rate of 9.3% for the S & P 500 in the second quarter, which would be the highest rate in over two years.
To identify potential winners in the upcoming earnings reports, CNBC Pro conducted a screening of FactSet data to pinpoint S & P 500 companies that could see an upside in their stock prices based on Wall Street analysts’ expectations. The criteria included having at least 15 upward earnings per share estimate revisions in the past three months, 10 or fewer downward revisions in the same period, consensus earnings per share estimates up by at least 10% in the past three months and 5% in the past six months, and an average analyst price target up by at least 5% in the last three months.
Among the companies that met these criteria, Royal Caribbean stands out as one that could see a post-earnings boost. Analysts have raised the cruise operator’s earnings estimates by 15% and 17% in the past three and six months, respectively. The stock has already surged by 26% year-to-date, and JPMorgan recently reiterated its overweight rating on Royal Caribbean, with a price target of $175. The bank sees the company as well-positioned for market share gains and continued success due to its improved product offerings.
Another stock with potential for a post-earnings rally is Seagate Technology, a data storage firm whose shares have climbed by nearly 21% in 2024. Analysts have revised their earnings estimates upwards by 25% and 64% in the past three and six months, respectively. Bank of America has maintained its bullish view on Seagate, citing secular demand trends and margin recovery as key drivers for the stock.
Deckers Outdoor, a footwear retailer, is also on the radar for potential post-earnings gains. The company is set to report its fiscal first-quarter 2025 earnings, with analysts predicting a strong performance based on a 15% increase in the consensus price target over the last three months. Shares of Deckers Outdoor have already surged by 33% in 2024, and UBS has reiterated its buy rating with a 12-month price target of $1,265, representing a significant upside potential.
Overall, the upcoming earnings reports present an opportunity for investors to capitalize on potential winners in the market. By closely monitoring the companies that meet the specified criteria and analyzing analyst expectations, investors can make informed decisions to maximize their returns in the current earnings season.
