We are in the last leg of the first-quarter 2022 earnings session. Earnings results of corporate America are likely to return to normalcy after last year’s astonishing growth. Earnings results of 2021 were favorably impacted in comparison to the pandemic-led lockdowns in 2020. So far, corporate America has delivered better-than-expected results despite earnings miss by some major corporate.
Several large-cap corporates are slated to announce their quarterly financial numbers this month. A handful of them with a favorable Zacks Rank has the potential to beat earnings estimates, which should help stock prices going forward. Five of them are — Olaplex Holdings Inc. OLPX, Cisco Systems Inc. CSCO, Analog Devices Inc. ADI, Ross Stores Inc. ROST and Costco Wholesale Corp. COST.
Strong Q1 Earnings Results So Far
As of May 6, 437 S&P 500 companies reported results. Year over year, the total earnings of these companies are up 8.9% on 14.6% higher revenues. Moreover, 79.4% of these companies beat earnings estimates and 75.3% beat revenue estimates.
For the first quarter, total earnings of the S&P 500 Index are currently expected to be up 9.4% year over year on 13.2% higher revenues. The current estimate will witness a significant improvement from 4.3% year-over-year earnings on 10% higher revenues estimated at the beginning of the reporting cycle.
Our Top Picks
Five companies with a favorable Zacks Rank will 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 (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 releases. 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.
Image Source: Zacks Investment Research
Olaplex is a technology-driven beauty-care company. OLPX manufactures and sells hair care products. Olaplex offers hair care shampoos and conditioners for use in treatment, maintenance, and protection of hair.
Olaplex provides hair care products to professional hair salons, retailers, and everyday consumers. OLPX’s products are sold through an omni-channel platform serving the professional, specialty retail and direct-to-consumer channels.
Olaplex has an Earnings ESP of +6.93%. It has an expected earnings growth rate of 35% for the current year. The Zacks Consensus Estimate for current-year earnings improved 12.5% over the last 60 days. OLPX is set to release earnings results on May 11, before the opening bell.
Analog Devices has strength across communication, consumer, industrial and automotive end-markets. Further, solid demand for high-performance analog and mixed-signal solutions was a tailwind. Growing momentum across the electric vehicle space on the back of robust Battery Management System solutions remains a positive for ADI.
Further, growing power design wins are the other positives for Analog Devices. The solid momentum of the HEV platform across cabin electronics ecosystem remains a tailwind for ADI. Moreover, Analog Devices remains optimistic about the growth prospects associated with its Maxim acquisition and 5G.
ADI has an Earnings ESP of +0.60%. It has an expected earnings growth rate of 30.5% for the current year (October 2022). The Zacks Consensus Estimate for current-year earnings improved 1.3% over the last 60 days.
Analog Devices recorded earnings surprises in the last four reported quarters, with an average beat of 6%. The company is set to release earnings results on May 18, before the opening bell.
Cisco‘s performance is benefiting from strength in its product portfolio, customer segments and momentum in product order growth. Strength in the Webscale business and a solid uptake of switching solutions, especially Catalyst 9000 and Meraki offerings, along with the robust adoption of the company’s subscription-based offerings, are its positives.
CSCO is benefiting from healthy uptake of identity and access, advanced threat and unified threat management security solutions amid high growth in Internet traffic. The buyout of Acacia Communications bodes well for the long haul.
Cisco has an Earnings ESP of +0.84%. It has an expected earnings growth rate of 7.1% for the current year (July 2022). The Zacks Consensus Estimate for current-year earnings improved 0.9% over the last 90 days.
CSCO recorded earnings surprises in the last four reported quarters, with an average beat of 1.8%. The company is set to release earnings results on May 18, after the closing bell.
Ross Stores is gaining from robust customer demand, accelerated vaccination rates, government stimulus payments and easing of COVID-19 restrictions. ROST’s sales benefited from broad-based growth across certain merchandise categories, regions, as well as robust and robust store sales.
The children and men’s categories performed well in the holiday selling period, and the Midwest and Southeast regions were the outperforming regions for Ross Stores. Sales trends were also robust at the dd’s DISCOUNTS business.
ROST has an Earnings ESP of +1.24%. It has an expected earnings growth rate of 3.9% for the current year (January 2023). Ross Stores recorded earnings surprises in the last four reported quarters, with an average beat of 33.3%. The company is set to release earnings results on May 19, after the closing bell.
Costco‘s key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. These factors have been helping COST register impressive sales and earnings numbers.
We expect Costco to register a 15.8% adjusted net income improvement in fiscal 2022 on 13.1% revenue growth. This outlook accounts for COST’s ability to navigate the ongoing inflationary environment and supply chain bottlenecks on several fronts. A favorable product mix, steady store traffic, pricing power and strong liquidity position should help Costco keep outperforming.
Costco has an Earnings ESP of +1.09%. It has an expected earnings growth rate of 18% for the current year (August 2022). The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 7 days.
COST recorded earnings surprises in the last four reported quarters, with an average beat of 13.3%. The company is set to release earnings results on May 26, after the closing bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Analog Devices, Inc. (ADI): Free Stock Analysis Report
Cisco Systems, Inc. (CSCO): Free Stock Analysis Report
Costco Wholesale Corporation (COST): Free Stock Analysis Report
Ross Stores, Inc. (ROT): Free Stock Analysis Report
Olaplex Holdings, Inc. (OLPX): Free Stock Analysis Report
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