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2 Standout Stocks to Buy After Beating Earnings Expectations
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With Tuesday’s earnings lineup giving us Q2 results from magnificent seven stocks Alphabet (GOOGL - Free Report) and Tesla (TSLA - Free Report) among other household names, HCA Healthcare (HCA - Free Report) and Spotify Technology (SPOT - Free Report) are two companies that stood out.
HCA Healthcare and Spotify both sport a Zacks Rank #2 (Buy) and were able to impressively exceed Q2 earnings expectations. To that point, now looks like a promising time to invest in their increased profitability.
HCA’s Essential Services
Seeing strong demand for its services, HCA operates surgery centers and freestanding emergency rooms along with urgent care centers and physician clinics in 20 states and the United Kingdom.
As one of the largest non-governmental hospital operators, HCA’s Q2 EPS spiked 28% to $5.50 compared to $4.29 a share in the comparative quarter. This also beat the Zacks EPS Consensus of $4.97 by 10%. Plus, Q2 sales of $17.49 billion came in 2% better than expected and rose 10% from $15.86 billion a year ago.
Image Source: Zacks Investment Research
Spotify’s Subscription Growth
As one of the most popular music streaming services, Spotify posted Q2 EPS of $1.43 which skyrocketed from an adjusted loss of -$1.69 a share in the prior year quarter. Spotify significantly exceeded Q2 EPS expectations of $1.08 by 32%.
Quarterly sales of $4.09 billion climbed 18% from $3.45 billion in Q2 2023 despite slightly missing estimates of $4.11 billion. Still, Spotify attributed its growing subscription offerings to what was its third consecutive quarter of profitability, adding 7 million subscribers which was a million above the company’s forecast.
Image Source: Zacks Investment Research
Furthermore, Spotify expects its monthly active users (MAU) to increase by 13 million during the third quarter to 639 million. Spotify projects its subscribers to increase by 5 million during Q3 to 251 million.
It’s noteworthy that Spotify stated it reached record strength in all of its profitability metrics during Q2, including a gross margin of 29.2%. Spotify’s free cash flow also hit a quarterly peak of 490 million euros or roughly $531.74 million.
Image Source: Zacks Investment Research
Recent Performance of HCA & SPOT
Spotify's stock has been one of the market’s top performers this year soaring over +70% while HCA’s +26% has also topped the S&P 500’s +17%. SPOT and HCA ended today’s trading session up +12% and +4% respectively.
Image Source: Zacks Investment Research
Bottom Line
After impressively exceeding Q2 bottom line expectations and posting exceptional quarterly growth, earrings estimate revisions are likely to trend higher for HCA Healthcare and Spotify. Considering both stocks are already expeccted to post double-digit EPS growth for fiscal 2024 and FY25, this makes now an ideal time to invest in their increased profitability.
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2 Standout Stocks to Buy After Beating Earnings Expectations
With Tuesday’s earnings lineup giving us Q2 results from magnificent seven stocks Alphabet (GOOGL - Free Report) and Tesla (TSLA - Free Report) among other household names, HCA Healthcare (HCA - Free Report) and Spotify Technology (SPOT - Free Report) are two companies that stood out.
HCA Healthcare and Spotify both sport a Zacks Rank #2 (Buy) and were able to impressively exceed Q2 earnings expectations. To that point, now looks like a promising time to invest in their increased profitability.
HCA’s Essential Services
Seeing strong demand for its services, HCA operates surgery centers and freestanding emergency rooms along with urgent care centers and physician clinics in 20 states and the United Kingdom.
As one of the largest non-governmental hospital operators, HCA’s Q2 EPS spiked 28% to $5.50 compared to $4.29 a share in the comparative quarter. This also beat the Zacks EPS Consensus of $4.97 by 10%. Plus, Q2 sales of $17.49 billion came in 2% better than expected and rose 10% from $15.86 billion a year ago.
Image Source: Zacks Investment Research
Spotify’s Subscription Growth
As one of the most popular music streaming services, Spotify posted Q2 EPS of $1.43 which skyrocketed from an adjusted loss of -$1.69 a share in the prior year quarter. Spotify significantly exceeded Q2 EPS expectations of $1.08 by 32%.
Quarterly sales of $4.09 billion climbed 18% from $3.45 billion in Q2 2023 despite slightly missing estimates of $4.11 billion. Still, Spotify attributed its growing subscription offerings to what was its third consecutive quarter of profitability, adding 7 million subscribers which was a million above the company’s forecast.
Image Source: Zacks Investment Research
Furthermore, Spotify expects its monthly active users (MAU) to increase by 13 million during the third quarter to 639 million. Spotify projects its subscribers to increase by 5 million during Q3 to 251 million.
It’s noteworthy that Spotify stated it reached record strength in all of its profitability metrics during Q2, including a gross margin of 29.2%. Spotify’s free cash flow also hit a quarterly peak of 490 million euros or roughly $531.74 million.
Image Source: Zacks Investment Research
Recent Performance of HCA & SPOT
Spotify's stock has been one of the market’s top performers this year soaring over +70% while HCA’s +26% has also topped the S&P 500’s +17%. SPOT and HCA ended today’s trading session up +12% and +4% respectively.
Image Source: Zacks Investment Research
Bottom Line
After impressively exceeding Q2 bottom line expectations and posting exceptional quarterly growth, earrings estimate revisions are likely to trend higher for HCA Healthcare and Spotify. Considering both stocks are already expeccted to post double-digit EPS growth for fiscal 2024 and FY25, this makes now an ideal time to invest in their increased profitability.