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Find Winning Stocks in Q2 Earnings Season with this 'First Profit' Screen
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The final week of July is jam-packed with earnings reports from hundreds of companies, including over 150 S&P 500 stocks. The list of companies spans nearly every area of the economy and should offer investors a better picture of how higher interest rates and soaring inflation are impacting consumers and therefore a bulk of the U.S. economy.
Wall Street will get reports from the big tech giants such as Microsoft and Apple, as well as Pfizer, ExxonMobil, Procter & Gamble, and beyond. Alongside earnings, Jay Powell and the Fed began their two-day policy meeting on Tuesday. The central bank is widely expected to raise its core interest rate by another 75 basis points as it does all it can to cool prices and prevent inflation from becoming entrenched.
The market got an early warning that higher prices might be finally slowing consumer spending. Walmart on Monday trimmed its guidance, citing the impact of higher costs on shoppers a few weeks ahead of its official second quarter release. “The increasing levels of food and fuel inflation are affecting how customers spend,” CEO Doug McMillon said in prepared remarks.
The market fell through early afternoon trading Tuesday, dragged down by the likes of Walmart, Salesforce, Nike, Dollar Tree, and others.
Despite the volatility and the near-term uncertainty, there are pockets of the market that have done well in 2022. Today, we utilized our Zacks ‘First Profit’ screen to identify potentially winning stocks that have recently turned things around in a big way…
First Profit
The idea is to search for companies that recently reported their first quarterly profit. More specifically, the screen searches for firms that just posted their first profit last quarter, after not posting a profit for at least the previous four quarters.
Finding companies that recently reported their first profits help investors find stocks that can prove to be big winners. These companies may vary widely. Some of the firms might be new, and this recent profit is perhaps the only profit in its short history.
Meanwhile, other companies might have held an impressive and long history of quarterly profitability, but for whatever reason haven't seen a profit in a while. Therefore, the return to profit could spark a turning point that management had promised or Wall Street had been clamoring for.
The concept is relatively simple: if the trend has been one of improvement, there is a solid chance the trend will continue. This is true whether a company has been profitable, or is just reaching that key inflection point.
And that’s what we are screening for today…
• EPS for the previous 4 Quarters less than or equal to 0
(This means in each of the previous 4 quarters (except the most recently reported quarter) the company has reported earnings of less than or equal to zero, i.e., no profit.)
• EPS for the recently reported quarter greater than 0
(This time, the company reported earnings greater than zero, meaning they finally showed a profit.)
• Current Price greater than or equal to 5
(Stocks that are trading for less than $5 are more speculative.)
The screen is pretty simple, yet powerful. Here are two of the roughly 25 stocks that made it through this week's screen…
Liberty Energy is a North American-based oilfield services firm that offers a diverse set of completion services and technologies geared toward onshore oil and natural gas exploration and production companies. Liberty Energy aims to sell safe, efficient, and high-quality hydraulic fracturing, engineering, and wireline services. The company said the frac market is strong amid a need for more energy around the globe. LBRT shares have surged 40% in 2022, and they popped again on Tuesday following a strong second quarter report and guidance.
Liberty Energy crushed our second quarter earnings estimates on July 25, having swung from an adjusted loss of -$0.29 a share to +$0.55 per share. LBRT’s upward earnings revisions help it land a Zacks Rank #1 (Strong Buy) right now and its EPS and revenue outlooks for 2022 and 2023 are rather impressive. Liberty Energy’s Oil and Gas - Field Services industry is in the top 14% of over 250 Zacks industries. And the firm recently announced a share repurchase program of up to $250 million.
Sierra Wireless, Inc.
Sierra Wireless is a leading IoT solutions provider that aims to join together devices, network services, and software to help “unlock value in the connected economy.” Sierra Wireless focuses on developing industry-specific solutions for IoT deployments such as a platform to extract real-time data to improve business decisions and beyond. SWIR is part of the Wireless Equipment industry that is in the top 30% of over 250 Zacks industries.
Sierra Wireless has crushed our bottom line estimates in the trailing four quarters and its FY22 and FY23 EPS estimates improved greatly compared to where they were prior to its strong Q1 financial release in May. Sierra Wireless lands a Zacks Rank #2 (Buy) right now, with it set to release its Q2 results on August 11. SWIR shares have climbed 22% in 2022 and 90% in the past three years.
Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Image: Bigstock
Find Winning Stocks in Q2 Earnings Season with this 'First Profit' Screen
The final week of July is jam-packed with earnings reports from hundreds of companies, including over 150 S&P 500 stocks. The list of companies spans nearly every area of the economy and should offer investors a better picture of how higher interest rates and soaring inflation are impacting consumers and therefore a bulk of the U.S. economy.
Wall Street will get reports from the big tech giants such as Microsoft and Apple, as well as Pfizer, ExxonMobil, Procter & Gamble, and beyond. Alongside earnings, Jay Powell and the Fed began their two-day policy meeting on Tuesday. The central bank is widely expected to raise its core interest rate by another 75 basis points as it does all it can to cool prices and prevent inflation from becoming entrenched.
The market got an early warning that higher prices might be finally slowing consumer spending. Walmart on Monday trimmed its guidance, citing the impact of higher costs on shoppers a few weeks ahead of its official second quarter release. “The increasing levels of food and fuel inflation are affecting how customers spend,” CEO Doug McMillon said in prepared remarks.
The market fell through early afternoon trading Tuesday, dragged down by the likes of Walmart, Salesforce, Nike, Dollar Tree, and others.
Despite the volatility and the near-term uncertainty, there are pockets of the market that have done well in 2022. Today, we utilized our Zacks ‘First Profit’ screen to identify potentially winning stocks that have recently turned things around in a big way…
First Profit
The idea is to search for companies that recently reported their first quarterly profit. More specifically, the screen searches for firms that just posted their first profit last quarter, after not posting a profit for at least the previous four quarters.
Finding companies that recently reported their first profits help investors find stocks that can prove to be big winners. These companies may vary widely. Some of the firms might be new, and this recent profit is perhaps the only profit in its short history.
Meanwhile, other companies might have held an impressive and long history of quarterly profitability, but for whatever reason haven't seen a profit in a while. Therefore, the return to profit could spark a turning point that management had promised or Wall Street had been clamoring for.
The concept is relatively simple: if the trend has been one of improvement, there is a solid chance the trend will continue. This is true whether a company has been profitable, or is just reaching that key inflection point.
And that’s what we are screening for today…
• EPS for the previous 4 Quarters less than or equal to 0
(This means in each of the previous 4 quarters (except the most recently reported quarter) the company has reported earnings of less than or equal to zero, i.e., no profit.)
• EPS for the recently reported quarter greater than 0
(This time, the company reported earnings greater than zero, meaning they finally showed a profit.)
• Current Price greater than or equal to 5
(Stocks that are trading for less than $5 are more speculative.)
The screen is pretty simple, yet powerful. Here are two of the roughly 25 stocks that made it through this week's screen…
Liberty Energy (LBRT - Free Report)
Liberty Energy is a North American-based oilfield services firm that offers a diverse set of completion services and technologies geared toward onshore oil and natural gas exploration and production companies. Liberty Energy aims to sell safe, efficient, and high-quality hydraulic fracturing, engineering, and wireline services. The company said the frac market is strong amid a need for more energy around the globe. LBRT shares have surged 40% in 2022, and they popped again on Tuesday following a strong second quarter report and guidance.
Liberty Energy crushed our second quarter earnings estimates on July 25, having swung from an adjusted loss of -$0.29 a share to +$0.55 per share. LBRT’s upward earnings revisions help it land a Zacks Rank #1 (Strong Buy) right now and its EPS and revenue outlooks for 2022 and 2023 are rather impressive. Liberty Energy’s Oil and Gas - Field Services industry is in the top 14% of over 250 Zacks industries. And the firm recently announced a share repurchase program of up to $250 million.
Sierra Wireless, Inc.
Sierra Wireless is a leading IoT solutions provider that aims to join together devices, network services, and software to help “unlock value in the connected economy.” Sierra Wireless focuses on developing industry-specific solutions for IoT deployments such as a platform to extract real-time data to improve business decisions and beyond. SWIR is part of the Wireless Equipment industry that is in the top 30% of over 250 Zacks industries.
Sierra Wireless has crushed our bottom line estimates in the trailing four quarters and its FY22 and FY23 EPS estimates improved greatly compared to where they were prior to its strong Q1 financial release in May. Sierra Wireless lands a Zacks Rank #2 (Buy) right now, with it set to release its Q2 results on August 11. SWIR shares have climbed 22% in 2022 and 90% in the past three years.
Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.
Click here to sign up for a free trial to the Research Wizard today.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance/.