We are in the last leg of the second-quarter 2023 earnings season. So far, earnings results are not great but they are not bad either. Moreover, the outlook given by companies that have already reported is far better than expected.

As of Aug 11, 457 S&P 500 companies reported earnings results. Total earnings of these companies are down 9.5% year-over-year on 0.5% higher revenues. Of these, 79% surpassed EPS estimates while 65.2% outpaced revenue estimates.

At present, our estimate has shown that total earnings of the S&P 500 Index will likely decline 8.2% year-over-year on 0.8% higher 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.

Major companies of most of the sector have already reported with the notable exception of the retail sector. Aside from the retail sector, a handful of corporate behemoths of other sectors will also report this month.

Our Top Picks

We have narrowed our search to three stocks that are set to declare earnings results next week. The combination of a possible earnings beat and a favorable Zacks Rank should drive their stocks in the near future. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.

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 release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

NVIDIA Corp. NVDA is gaining from the strong growth of artificial intelligence, high-performance computing and accelerated computing, which is boosting its Compute & Networking revenues. A surge in Hyperscale demand and a solid uptake of artificial intelligence-based smart cockpit infotainment solutions are acting as tailwinds for NVDA.

Zacks Rank #1 NVIDIA has an Earnings ESP of +5.56%. It has an expected earnings growth rate of more than 100% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last 30 days.

NVIDIA recorded earnings surprises in two out of the last four reported quarters, with an average beat of 0.3%. The company is set to release earnings results on Aug 23, after the closing bell.

Workday Inc.’s WDAY revenue growth continues to be driven by high demand for its HCM and financial management solutions. WDAY’s cloud-based business model and expanding product portfolio have been the primary growth drivers. Strong emphasis on the integration of generative AI in WDAY’s products and the development of various AI-driven applications to drive more value is a tailwind.

Zacks Rank #1 Workday has an Earnings ESP of +2.01%. It has an expected earnings growth rate of 45.9% for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.

Workday recorded earnings surprises in the last four reported quarters, with an average beat of 13.1%. The company is set to release earnings results on Aug 24, after the closing bell.

Coty Inc. COTY has been benefiting from its focus on six strategic pillars aimed at sustainable growth. These include stabilizing Consumer Beauty brands, strengthening e-commerce and establishing a solid skincare portfolio, among others. COTY made several strategic partnerships to enhance its brand portfolio. Management raised its like-for-like sales view for fiscal 2023.

Zacks Rank #2 Coty has an Earnings ESP of +20.00%. The Zacks Consensus Estimate for current-year earnings has improved 2.1% over the last 30 days. Coty recorded earnings surprises in three out of the last four reported quarters, with an average beat of 10%. The company is set to release earnings results on Aug 22, before the opening bell.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
NVIDIA Corporation (NVDA): Free Stock Analysis Report

Workday, Inc. (WDAY): Free Stock Analysis Report

Coty (COTY): Free Stock Analysis Report

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