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7 Major Earnings Season Winners With More Upside Ahead
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First-quarter earnings for 2019 have proven to be much better than feared at the end of 2018 and the start of 2019. That 3.2% gain in gross domestic product for the first quarter also offers support that the fears were simply too great versus reality.
24/7 Wall St. perused the top earnings reports from the S&P 500 companies wherein companies were beating earnings expectations, and in which shares rose on the news and continued to rise or hold their ground. Some of these are reversals that might be eliminating their ill-fortunes of the recent past, while some others are just continued upside. It was hard to decipher the overall picture, with many names in the health care sector reversing the prior week’s losses, but we have identified seven standout earnings reports from the week of April 26, 2019.
Credit Suisse research released ahead of Friday’s opening bell indicated that 53% of the market cap of the S&P 500 had reported earnings for the first fiscal or calendar quarter of 2019. It turns out that 77% of companies have been beating earnings estimates by an average of 7.2%, better than a three-year average of 71% and 5.4% (respectively). The overall pace is for earnings growth of 3%, if the rest of the companies have a typical beat-rate for the remainder of the earnings season.
The S&P 500 is up over 17% year to date, and at $2,939.88 it is within about a point of its all-time high. The Nasdaq-100 is up over 23%, with such a strong technology presence, and it and the Nasdaq Composite both hit new highs this last week.
They might not be the only winners from the S&P 500 so far, but these seven standouts of the first-quarter earnings season from the week of April 26 stood out not only from the market as a whole but among their peers.
Cincinnati Financial Corp. (NASDAQ: CINF) reported earnings late on Wednesday showing a 43% gain in operating income, with $1.05 in earnings per share, while the consensus estimate from Refinitiv had been $0.87 per share. The insurance company’s shares initially rose by about 3%, but the stock closed up almost 7% to $93.57 the day after the initial report and then closed higher again by 0.7% at $94.19 on Friday.
The post-earnings high of $94.44 is also an all-time high, and the dividend hike earlier this year made for the 59th consecutive year of such hikes. It is a leader in the ranks of companies with 50+ consecutive years of dividend hikes. Its gain for the week was 8.8%.
eBay Inc. (NASDAQ: EBAY) reported late on April 2,3 with earnings that exceeded expectations ($0.67 per share versus $0.63 expected) by enough that eBay was comfortable raising its 2019 earnings guidance. The company now sees full-year revenues of $10.83 billion to $10.93 billion and adjusted earnings coming in at $1.94 to $2.04 per share, along with other positive views. The stock was already up well over 20% this year, but a 0.6% add-on gain on Friday with a $38.36 close put eBay back within striking distance of its $40.86 52-week high. Its gain was almost 7% for the week.
Facebook Inc. (NASDAQ: FB) managed to beat earnings expectations again, and even setting aside large dollars for an expected charge did not thwart analysts from increasing price targets galore. UBS even upgraded the rating to Buy to join the other more positive firms covering Facebook. Despite a 0.9% drop to $191.49 a share at the very end of the week, the stock closed up 7.4% for the week, and it is suddenly as if all those election ads and privacy issues don’t matter again. Facebook is back at levels not seen since last summer.
Ford Motor Co. (NYSE: F) has struggled to find much, if any, good news in some time that would entice new shareholders to buy more shares. Ford’s quarterly report showed adjusted earnings of $0.44 per share with total revenues of $40.3 billion. This beat the Refinitiv targets of $0.27 per share and $37.4 billion.
The shares gained 7% initially but ended up closing up 10.7% at $10.41 on Friday, despite news of a criminal probe into emissions. Ford also has that monster 5.8% dividend that still has more than ample earnings coverage. The 52-week trading range is $7.41 to $12.15. Ford’s weekly gain was 9%, which is also now a 20% gain just in the past month.
Hershey Co. (NYSE: HSY) managed to hit an all-time high after the company posted adjusted earnings of $1.59 per share on $2.02 billion in revenues. The company also reaffirmed its targets for 1% to 3% sales growth in 2019, with adjusted earnings to be in a range of $5.63 to $5.74 per share. The stock rose 4.6% to $122.44 after earnings in Thursday’s trading, but at least three analysts raising price targets, helping to boost the stock another 2.2% to $125.17 by Friday’s closing bell. That’s an all-time high, and Hershey shares closed out the week up 7%.
Microsoft Corp. (NASDAQ: MSFT) deserves more than a token note or honorable mention here, after its earnings showed continued performance being driven by the cloud. With a post-earnings high of $131.37 a share, Microsoft topped the $1 trillion market cap for the first time ever, and a 0.6% gain to $129.89 on Friday was still better than a 5% gain on the week — for close to a $50 billion gain in its market value. Analysts now are calling for even more upside ahead, some with handy price target hikes.
Quest Diagnostics Inc. (NYSE: DGX) reported earnings on Tuesday with net income of $1.20 per share and adjusted per-share earnings of $1.40, beating the consensus estimate of $1.36 (adjusted) per share. Revenue of $1.89 billion also exceeded the $1.87 billion estimate, and the company’s 2019 revenue guidance was put in a range of $7.60 billion to $7.75 billion.
What mattered here was that Quest shares sold off handily in the prior week, roughly from $92 down to $85, but they screamed back after the earnings and guidance to close out the week at $95.34. This stock is still handily below its high of $116.49, but the negative sentiment around health care shares has, at least for now, been remediated after its earnings. Quest’s gain for the week was 11.2%.
In addition to these earnings season winners, check out five fresh analyst picks trading under $10 per share that have gigantic upside forecasts.
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