We are in the middle of the second-quarter 2023 earnings season. This week is the biggest one for this reporting cycle with as many as 1,619 companies slated to declare their quarterly financial numbers. Market participants will keenly watch these results to see whether there exists any indication of a near-term recession.
As of Jul 28, 254 S&P 500 companies reported earnings results. Total earnings of these companies are down 3.4% year-over-year on 1.7% higher revenues. Of these 254 companies, 80.3% surpassed EPS estimates while 64.6% outpaced revenue estimates.
At present, our estimate has shown that the total earnings of the S&P 500 Index will likely drop 0.2% year-over-year on 0.2% lower revenues. The second-quarter earnings decline would follow the 3.4% decline in the first quarter and a 5.4% drop in fourth-quarter 2022.
Several major companies will report this week. We have selected five such companies with a favorable Zacks Rank that are poised to beat earnings estimates. The combination of a possible earnings beat and a favorable Zacks Rank should drive their stocks in the near future.
Our Top Picks
We have narrowed our search to five large-cap stocks that are set to declare second-quarter earnings results on Aug 1. Each of our picks carries a Zacks Rank #2 (Buy) and has a positive Earnings ESP.
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.
Public Service Enterprise Group Inc. PEG has a solid portfolio of regulated and non-regulated utility assets that offer stable earnings and growth and significant long-term growth potential. PEG anticipates investing $15.5 to $18 billion for the 2023-2027 period, which could result in an expected compound EPS growth rate of 5%-7% and compounded annual rate base growth of 6-7.5%.
Public Service Enterprise has an Earnings ESP of +0.66%. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days. PEG recorded earnings surprises in three out of the last four reported quarters, with an average beat of 4.3%. The company is set to release earnings results, before the opening bell.
Paycom Software Inc. PAYC has been seeing continued growth despite disruptions caused by macroeconomic headwinds and geopolitical issues. PAYC’s revenues increased mainly driven by client additions and continued focus on cross-selling to existing clients.
PAYC’s differentiated employee strategy, measurement capabilities and comprehensive product offerings are helping it win new customers. Further, solutions like Ask Here and Manager on-the-Go, both focusing on employee usage and efficiency, are tailwinds.
Paycom has an Earnings ESP of +1.88%. It has an expected earnings growth rate of 25.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the last 90 days.
PAYC recorded earnings surprises in the last four reported quarters, with an average beat of 10.8%. The company is set to release earnings results, after the closing bell.
MPLX LP MPLX is least exposed to commodity price fluctuations since it generates stable fee-based revenues from diverse midstream energy assets via long-term contracts. Strong and stable operations will back the partnership to persistently grow its cash flow. MPLX’s strong first quarter results were aided by increased pipeline tariff rates and throughput.
MPLX has an Earnings ESP of +1.01%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the last 30 days. MPLX recorded earnings surprises in the last four reported quarters, with an average beat of 5.9%. The company is set to release earnings results, before the opening bell.
Molson Coors Beverage Co. TAP manufactures, markets, and sells beer and other malt beverage products under various brands in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. TAP has gained from strength in its core brands, as well as the premium portfolio and contributions from its Revitalization Plan. For 2023, sales are projected to grow year over year in the low-single digits on a constant-currency basis.
Molson Coors Beverage has an Earnings ESP of +6.15%. It has an expected earnings growth rate of 16.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last seven days.
TAP recorded earnings surprises in three out of the last four reported quarters, with an average beat of 32.1%. The company is set to release earnings results, after the closing bell.
Ecolab Inc.‘s ECL strong pricing momentum and digital capabilities are promising. Expansion of margins bodes well. A strong product portfolio and ECL’s cost-efficiency program raise optimism. Strength in business also augur well.
Ecolab has an Earnings ESP of +0.50%. It has an expected earnings growth rate of 11.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
ECL recorded earnings surprises in three out of the last four reported quarters, with an average beat of 0.9%. The company is set to release earnings results, after the closing bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Ecolab Inc. (ECL): Free Stock Analysis Report
Public Service Enterprise Group Incorporated (PEG): Free Stock Analysis Report
Molson Coors Beverage Company (TAP): Free Stock Analysis Report
MPLX LP (MPLX): Free Stock Analysis Report
Paycom Software, Inc. (PAYC): Free Stock Analysis Report
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