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Top 5 Stocks With Solid Earnings Estimate Revision and Upside
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We are in the last leg of the second-quarter earnings season, which so far remains strong. Looking at the second quarter as a whole, total earnings of the S&P 500 Index are expected to be up 9.4% from the same period last year on 5.4% higher revenues. If it materializes, this will be the highest quarterly earnings growth since the first quarter of 2022.
Meanwhile, irrespective of the S&P 500 components, a majority of all listed companies have already reported financial results of their last completed quarter. Analysts have either revised or are in the process of revising earnings and revenue estimates for those companies who have already reported.
At this stage, stocks that have seen positive earnings estimate revisions after the last earnings are generally attractive to investors. Moreover, a combination of these stocks along with a top Zacks Rank, should be more lucrative as this combo has the potential for strong stock price appreciation in the near future.
Our Top Picks
We have narrowed our search to five U.S. corporate bigwigs (market capital > $30 billion) that have seen positive earnings estimate revisions in the last 30 days. These stocks have strong upside potential for the rest of 2024. Finally, each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past six month.
Image Source: Zacks Investment Research
Royal Caribbean Cruises Ltd. (RCL - Free Report) reported impressive second-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. RCL benefited from stronger pricing on close-in demand and continued strength in onboard revenues.
During the second quarter, RCL reported solid booking volumes across all key itineraries. It also stated a rise in consumer spending onboard and pre-cruise purchases (exceeding 2023 levels) driven by higher participation at increased prices. In second-quarter 2024, load factors were 108%.
Royal Caribbean Cruises is highly optimistic about the demand and pricing landscape for 2024. RCL emphasized investing in a modern digital travel platform to streamline the vacation booking process for customers and expand wallet share. Also, it highlighted new innovative ships and onboard experiences to boost its offering and deliver superior yields and margins.
Solid Earnings Estimate Revision
In third-quarter 2024, management estimates adjusted EPS of $4.90-$5. For 2024, the company anticipates adjusted EPS in the range of $11.35-$11.45, up from the prior projection of $10.70-$10.90.
Royal Caribbean Cruises has an expected revenue and earnings growth rate of 17.8% and 68.4%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter, current-year and next-year earnings have improved in the last 30 days.
Image Source: Zacks Investment Research
Strong Stock Price Upside Left
The stock price of RCL has climbed 33.1% in the past six months. The average price target of brokerage firms represents an increase of 19.5% from the last closing price of $155.75. The brokerage target price is currently in the range of $154-$210.
GE Aerospace (GE - Free Report) reported second-quarter adjusted earnings were $1.20 per share, which beat the Zacks Consensus Estimate of $0.97. The bottom line surged 62.2% year over year.Total revenues were $9.09 billion, indicating an increase of 4% year over year. Total orders grew 18% on a year-over-year basis to $11.2 billion. Adjusted revenues were $8.22 billion, marking an increase of 4% year over year. However, the metric missed the consensus estimate of $8.38 billion.
GE has been witnessing strength in its Aerospace business, driven by robust demand for commercial engines and services. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel also auger well for GE.
Solid Earnings Estimate Revision
For 2024, GE expects adjusted revenues to grow in the high-single-digit range from the year-ago period. Operating profit is estimated to be in the range of $6.5-$6.8 billion. Adjusted earnings are predicted to be in the band of $3.95-$4.20 per share. Free cash flow is anticipated to be in the range of $5.3-$5.6 billion, with the conversion rate projected to be more than 100%.
GE Aerospace expects the Commercial Engines & Services segment’s revenues to grow in the range of low-double-digits to mid-teens while operating profit is anticipated to be in the band of $6.3-$6.5 billion. For the Defense & Propulsion Technologies segment, revenues are projected to increase in the mid-single-digits to the high-single-digits range while operating profit is anticipated to be in the band of $1.0-$1.3 billion.
GE has an expected earnings growth rate of 48.8% for the current year. Although its revenue growth rate is negative for the current year, it is 14% for next year. The Zacks Consensus Estimate for current-quarter, current-year and next-year earnings have improved in the last 30 days.
Image Source: Zacks Investment Research
Strong Stock Price Upside Left
The stock price of GE has rallied 19.3% in the past six months. The average price target of brokerage firms represents an increase of 19% from the last closing price of $167.13. The brokerage target price is currently in the range of $180-$215.
Interactive Brokers Group Inc. (IBKR - Free Report) reported second-quarter adjusted earnings per share of $1.76, which beat the Zacks Consensus Estimate of $1.69. Also, the bottom line reflects a rise of 33.3% from the prior-year quarter. Total GAAP net revenues were $1.23 billion, up 23% year over year. The top line missed the Zacks Consensus Estimate of $1.26 billion. Adjusted net revenues were $1.29 billion, up 21.2%.
IBKR’s efforts to develop proprietary software, low compensation expenses relative to net revenues, an increase in emerging market customers and higher interest rates are expected to boost revenues in the upcoming quarters. We project total net revenues to witness a CAGR of 5.2% over the next three years. IBKR’s enhanced capital distribution plans seem sustainable given a solid liquidity position.
Solid Earnings Estimate Revision
Given market expectations of rate cuts in 2024, management anticipates the effect of each 25 basis points (bps) decrease in the Fed Funds rate to result in reduction in annual net interest income (NII) by $58 million. Further, every 25-bps decrease in all the relevant non-USD benchmark rates will lead to a further reduction in annual NII by $18 million.
Interactive Brokers Group has an expected revenue and earnings growth rate of 14.7% and 18.4%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter, next-quarter, current-year and next-year earnings have improved in the last 30 days.
Image Source: Zacks Investment Research
Strong Stock Price Upside Left
The stock price of IBKR has advanced 18.7% in the past six months. The average price target of brokerage firms represents an increase of 18.9% from the last closing price of $116.55. The brokerage target price is currently in the range of $100-$180.
Amphenol Corp. (APH - Free Report) reported second-quarter adjusted earnings of $0.43 per share, which beat the Zacks Consensus Estimate by 4.88%. The earnings figure increased 19.4% year over year. Net sales increased 18.2% year over year to $3.61 billion and beat the consensus mark by 7.02%. Organically, net sales increased 11%.
Recent acquisitions are helping APH to expand its position across a broad array of technologies and markets. APH’s wide array of interconnect and sensor products boosts long-term prospects. Amphenol’s diversified business model lowers the volatility of individual end markets and geographies.
Solid Earnings Estimate Revision
Amphenol is benefiting from robust growth across IT Datacom, commercial air, military, industrial and automotive end-markets as well as solid contribution from acquisitions. It expects third-quarter 2024 earnings between $0.43 and $0.45 per share, indicating growth between 10% and 15% year over year. Revenues are anticipated between $3.7 billion and $3.80 billion.
APH has an expected revenue and earnings growth rate of 15% and 15.9%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter, current-year and next-year earnings have improved in the last 30 days.
Image Source: Zacks Investment Research
Strong Stock Price Upside Left
The stock price of APH has surged 19.2% in the past six months. The average price target of brokerage firms represents an increase of 18.5% from the last closing price of $62.62. The brokerage target price is currently in the range of $60-$82.
Howmet Aerospace Inc. (HWM - Free Report) reported second-quarter adjusted earnings of $0.67 per share beating the Zacks Consensus Estimate of $0.60. The bottom line surged 52% year over year. Total revenues of $1.88 billion surpassed the consensus estimate of $1.84 billion. The top line increased 14% from the year-ago quarter.
HWM is benefiting from solid momentum in the commercial aerospace market, driven by robust build rates and wide-body aircraft recovery. HWM is also witnessing strength in its defense aerospace business on the back of rising U.S. & international defense budgets.
Robust orders for engine spares for the F-35 program and spares and new builds for legacy fighter-planes auger well. Given the strength in most of its served markets, Howmet has built a sound liquidity position that supports its shareholder-friendly policies.
Solid Earnings Estimate Revision
For the third quarter, Howmet expects revenues of $1.845 -$1.865 billion. Adjusted EBITDA is expected to be between $460 million and $470 million while the adjusted EBITDA margin is anticipated in the range of 24.9-25.2%. Adjusted earnings per share are estimated to be in the range of $0.63-$0.65.
Four full year 2024, Howmet anticipates revenues to be $7.400-$7.480 billion compared with the earlier anticipated range of $7.225-$7.375 billion. Adjusted EBITDA is expected to be between $1.855 billion and $1.875 billion while the adjusted EBITDA margin is projected to be 25.1%. Adjusted earnings per share are forecasted to be in the band of $2.53-$2.57. Free cash flow is expected to be in the range of $840-$900 million.
HWM has an expected revenue and earnings growth rate of 12.6% and 37.5%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter, next-quarter, current-year and next-year earnings have improved in the last seven days.
Image Source: Zacks Investment Research
Strong Stock Price Upside Left
The stock price of HWM has jumped 58.2% in the past six months. The average price target of brokerage firms represents an increase of 10.9% from the last closing price of $93.09. The brokerage target price is currently in the range of $70-$115.
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Top 5 Stocks With Solid Earnings Estimate Revision and Upside
We are in the last leg of the second-quarter earnings season, which so far remains strong. Looking at the second quarter as a whole, total earnings of the S&P 500 Index are expected to be up 9.4% from the same period last year on 5.4% higher revenues. If it materializes, this will be the highest quarterly earnings growth since the first quarter of 2022.
Meanwhile, irrespective of the S&P 500 components, a majority of all listed companies have already reported financial results of their last completed quarter. Analysts have either revised or are in the process of revising earnings and revenue estimates for those companies who have already reported.
At this stage, stocks that have seen positive earnings estimate revisions after the last earnings are generally attractive to investors. Moreover, a combination of these stocks along with a top Zacks Rank, should be more lucrative as this combo has the potential for strong stock price appreciation in the near future.
Our Top Picks
We have narrowed our search to five U.S. corporate bigwigs (market capital > $30 billion) that have seen positive earnings estimate revisions in the last 30 days. These stocks have strong upside potential for the rest of 2024. Finally, each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past six month.
Image Source: Zacks Investment Research
Royal Caribbean Cruises Ltd. (RCL - Free Report) reported impressive second-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. RCL benefited from stronger pricing on close-in demand and continued strength in onboard revenues.
During the second quarter, RCL reported solid booking volumes across all key itineraries. It also stated a rise in consumer spending onboard and pre-cruise purchases (exceeding 2023 levels) driven by higher participation at increased prices. In second-quarter 2024, load factors were 108%.
Royal Caribbean Cruises is highly optimistic about the demand and pricing landscape for 2024. RCL emphasized investing in a modern digital travel platform to streamline the vacation booking process for customers and expand wallet share. Also, it highlighted new innovative ships and onboard experiences to boost its offering and deliver superior yields and margins.
Solid Earnings Estimate Revision
In third-quarter 2024, management estimates adjusted EPS of $4.90-$5. For 2024, the company anticipates adjusted EPS in the range of $11.35-$11.45, up from the prior projection of $10.70-$10.90.
Royal Caribbean Cruises has an expected revenue and earnings growth rate of 17.8% and 68.4%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter, current-year and next-year earnings have improved in the last 30 days.
Image Source: Zacks Investment Research
Strong Stock Price Upside Left
The stock price of RCL has climbed 33.1% in the past six months. The average price target of brokerage firms represents an increase of 19.5% from the last closing price of $155.75. The brokerage target price is currently in the range of $154-$210.
GE Aerospace (GE - Free Report) reported second-quarter adjusted earnings were $1.20 per share, which beat the Zacks Consensus Estimate of $0.97. The bottom line surged 62.2% year over year.Total revenues were $9.09 billion, indicating an increase of 4% year over year. Total orders grew 18% on a year-over-year basis to $11.2 billion. Adjusted revenues were $8.22 billion, marking an increase of 4% year over year. However, the metric missed the consensus estimate of $8.38 billion.
GE has been witnessing strength in its Aerospace business, driven by robust demand for commercial engines and services. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel also auger well for GE.
Solid Earnings Estimate Revision
For 2024, GE expects adjusted revenues to grow in the high-single-digit range from the year-ago period. Operating profit is estimated to be in the range of $6.5-$6.8 billion. Adjusted earnings are predicted to be in the band of $3.95-$4.20 per share. Free cash flow is anticipated to be in the range of $5.3-$5.6 billion, with the conversion rate projected to be more than 100%.
GE Aerospace expects the Commercial Engines & Services segment’s revenues to grow in the range of low-double-digits to mid-teens while operating profit is anticipated to be in the band of $6.3-$6.5 billion. For the Defense & Propulsion Technologies segment, revenues are projected to increase in the mid-single-digits to the high-single-digits range while operating profit is anticipated to be in the band of $1.0-$1.3 billion.
GE has an expected earnings growth rate of 48.8% for the current year. Although its revenue growth rate is negative for the current year, it is 14% for next year. The Zacks Consensus Estimate for current-quarter, current-year and next-year earnings have improved in the last 30 days.
Image Source: Zacks Investment Research
Strong Stock Price Upside Left
The stock price of GE has rallied 19.3% in the past six months. The average price target of brokerage firms represents an increase of 19% from the last closing price of $167.13. The brokerage target price is currently in the range of $180-$215.
Interactive Brokers Group Inc. (IBKR - Free Report) reported second-quarter adjusted earnings per share of $1.76, which beat the Zacks Consensus Estimate of $1.69. Also, the bottom line reflects a rise of 33.3% from the prior-year quarter.
Total GAAP net revenues were $1.23 billion, up 23% year over year. The top line missed the Zacks Consensus Estimate of $1.26 billion. Adjusted net revenues were $1.29 billion, up 21.2%.
IBKR’s efforts to develop proprietary software, low compensation expenses relative to net revenues, an increase in emerging market customers and higher interest rates are expected to boost revenues in the upcoming quarters. We project total net revenues to witness a CAGR of 5.2% over the next three years. IBKR’s enhanced capital distribution plans seem sustainable given a solid liquidity position.
Solid Earnings Estimate Revision
Given market expectations of rate cuts in 2024, management anticipates the effect of each 25 basis points (bps) decrease in the Fed Funds rate to result in reduction in annual net interest income (NII) by $58 million. Further, every 25-bps decrease in all the relevant non-USD benchmark rates will lead to a further reduction in annual NII by $18 million.
Interactive Brokers Group has an expected revenue and earnings growth rate of 14.7% and 18.4%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter, next-quarter, current-year and next-year earnings have improved in the last 30 days.
Image Source: Zacks Investment Research
Strong Stock Price Upside Left
The stock price of IBKR has advanced 18.7% in the past six months. The average price target of brokerage firms represents an increase of 18.9% from the last closing price of $116.55. The brokerage target price is currently in the range of $100-$180.
Amphenol Corp. (APH - Free Report) reported second-quarter adjusted earnings of $0.43 per share, which beat the Zacks Consensus Estimate by 4.88%. The earnings figure increased 19.4% year over year. Net sales increased 18.2% year over year to $3.61 billion and beat the consensus mark by 7.02%. Organically, net sales increased 11%.
Recent acquisitions are helping APH to expand its position across a broad array of technologies and markets. APH’s wide array of interconnect and sensor products boosts long-term prospects. Amphenol’s diversified business model lowers the volatility of individual end markets and geographies.
Solid Earnings Estimate Revision
Amphenol is benefiting from robust growth across IT Datacom, commercial air, military, industrial and automotive end-markets as well as solid contribution from acquisitions. It expects third-quarter 2024 earnings between $0.43 and $0.45 per share, indicating growth between 10% and 15% year over year. Revenues are anticipated between $3.7 billion and $3.80 billion.
APH has an expected revenue and earnings growth rate of 15% and 15.9%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter, current-year and next-year earnings have improved in the last 30 days.
Image Source: Zacks Investment Research
Strong Stock Price Upside Left
The stock price of APH has surged 19.2% in the past six months. The average price target of brokerage firms represents an increase of 18.5% from the last closing price of $62.62. The brokerage target price is currently in the range of $60-$82.
Howmet Aerospace Inc. (HWM - Free Report) reported second-quarter adjusted earnings of $0.67 per share beating the Zacks Consensus Estimate of $0.60. The bottom line surged 52% year over year. Total revenues of $1.88 billion surpassed the consensus estimate of $1.84 billion. The top line increased 14% from the year-ago quarter.
HWM is benefiting from solid momentum in the commercial aerospace market, driven by robust build rates and wide-body aircraft recovery. HWM is also witnessing strength in its defense aerospace business on the back of rising U.S. & international defense budgets.
Robust orders for engine spares for the F-35 program and spares and new builds for legacy fighter-planes auger well. Given the strength in most of its served markets, Howmet has built a sound liquidity position that supports its shareholder-friendly policies.
Solid Earnings Estimate Revision
For the third quarter, Howmet expects revenues of $1.845 -$1.865 billion. Adjusted EBITDA is expected to be between $460 million and $470 million while the adjusted EBITDA margin is anticipated in the range of 24.9-25.2%. Adjusted earnings per share are estimated to be in the range of $0.63-$0.65.
Four full year 2024, Howmet anticipates revenues to be $7.400-$7.480 billion compared with the earlier anticipated range of $7.225-$7.375 billion. Adjusted EBITDA is expected to be between $1.855 billion and $1.875 billion while the adjusted EBITDA margin is projected to be 25.1%. Adjusted earnings per share are forecasted to be in the band of $2.53-$2.57. Free cash flow is expected to be in the range of $840-$900 million.
HWM has an expected revenue and earnings growth rate of 12.6% and 37.5%, respectively, for the current year. The Zacks Consensus Estimate for current-quarter, next-quarter, current-year and next-year earnings have improved in the last seven days.
Image Source: Zacks Investment Research
Strong Stock Price Upside Left
The stock price of HWM has jumped 58.2% in the past six months. The average price target of brokerage firms represents an increase of 10.9% from the last closing price of $93.09. The brokerage target price is currently in the range of $70-$115.