July was another great month for stocks, with the Q2 earnings season helping keep sentiment positive and green primarily widespread.
And throughout the month, three stocks – Domino’s Pizza DPZ, Roku ROKU, and Super Micro Computer SMCI – all delivered outsized gains, reflecting notable relative strength.
In addition, all three have enjoyed positive earnings estimate revisions, indicating near-term optimism among analysts. But are they worth a bet? Let’s take a closer look.
Roku
Roku shares got a massive boost following its better-than-expected quarterly results, with the company delivering a 40% EPS beat and reporting revenue 10% ahead of expectations thanks to strong consumer demand for its TV models.
In addition, the company continues to attract customers, with Active Accounts growing by 1.9 million sequentially from Q1 2023.
Analysts have taken their expectations higher following the better-than-expected results, helping land the stock into a favorable Zacks Rank #2 (Buy).
Domino’s Pizza
Analysts have consistently raised their earnings expectations across the board for Domino’s Pizza, with the stock sporting a Zacks Rank #1 (Strong Buy). The company missed on the top line in its latest release but delivered a modest EPS beat, helping shares find buying pressure post-earnings.
For those seeking income, DPZ shares have that covered; shares currently yield a solid 1.2% annually, with the payout growing by an impressive 19% over the last five years. In addition, the company’s 37% payout ratio resides on the sustainable side.
The company is forecasted to post solid earnings growth, with estimates suggesting 9% growth in its current fiscal year (FY23) and an additional 15% in FY24. Keep an eye out for the company’s next release expected in early October; the Zacks Consensus EPS Estimate of $3.28 implies an improvement of nearly 18% year-over-year.
Super Micro Computer
Super Micro Computer shares have been massive winners not just in July but in 2023 overall, up an impressive 300%. The stock sports a Zacks Rank #1 (Strong Buy), with the revisions trend particularly noteworthy for its upcoming release expected on August 8th.
Regarding the mentioned upcoming release, our consensus revenue estimate stands at $2.0 billion, 21% higher than the year-ago quarter. Shares have enjoyed a nice boost post-earnings in back-to-back releases.
Shares may not entice value-conscious investors, with the current 33.1X forward earnings multiple (F1) residing on the higher end of the spectrum. Still, investors haven’t minded forking up the premium given SMCI’s strong growth trajectory, with earnings forecasted to climb 100% in its current fiscal year (FY23) on 33% higher revenues.
Bottom Line
Stocks had a great July, with earnings season helping to keep sentiment lifted and a resilient economy providing further positivity.
And throughout the month, several stocks – Domino’s Pizza DPZ, Roku ROKU, and Super Micro Computer SMCI – all delivered outsized gains, reflecting notable relative strength.
Domino’s Pizza Inc (DPZ): Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI): Free Stock Analysis Report
Roku, Inc. (ROKU): Free Stock Analysis Report
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