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3 Large-Cap Stocks Rapidly Growing Earnings

The S&P 500 index has increased its annual earnings per share (not inflation-adjusted) by 9.4% on average every year since the year ended Dec. 31, 2015. As a result of this, the share price of the benchmark for the U.S. stock market has risen approximately 50.4% in the past five years to $3,066.91 at close on Friday.

The past doesn't provide any guarantee for future performance, but companies that have grown their earnings at a similar or even higher pace than the index should bear a high potential to beat most of their peers and show solid returns, as earnings growth is the main catalyst to share prices.


Thus, my search resulted in the following three rapidly growing earnings per share large caps. This search refers to earnings per share without non-recurring items, as they exclude those one-time entries such as infrequent or unexpected gains or losses.

Adobe

Adobe Inc. (NASDAQ:ADBE) has grown its trailing 12-month earnings per share without non-recurring items by 64.1% over the past five years, as illustrated in the chart below.

The San Jose, California-based diversified software company closed at $277.82 per share on Friday for a market capitalization of $134.49 billion.

The stock price increased by nearly 23% so far this year and it outperformed the S&P 500 by 2%.

The company has a price-earnings ratio of 49.35 versus the industry median of 25 and a price-sales ratio of 12.87 compared to the industry median of 2.34.

Adobe has not paid a dividend since 2005.

Wall Street recommends an overweight rating for shares of the stock with an average target price of $313.92. The recommended rating is for stocks expected to outperform either the overall market or their industries within a year.

Prologis

Prologis, Inc. (NYSE:PLD) has grown its trailing 12-month earnings per share without non-recurring items by 45% over the past five years, as shown in the chart below.

The San Francisco-based international logistics real estate investment trust closed at $87.44 per share on Friday for a market capitalization of $55.24 billion.

The stock has risen 53% so far this year, outperforming the S&P 500 by more than 30%.

The company has a price-earnings ratio of 31.23 versus the industry median of 17.48 and a price-sales ratio of 17.29 versus the industry median of 7.95.

The company is returning part of its cumulative earnings to the shareholders in the form of dividends paid every quarter. Also, Prologis has continuously increased dividends since 2013. On Sept. 30, the company paid a quarterly dividend of 53 cents per common share, producing a 2.37% dividend yield versus the S&P 500's yield of 1.87%.

Wall Street issued an overweight recommendation rating for shares of Prologis with an average target price of $91.57.

Electronic Arts

Electronic Arts Inc. (NASDAQ:EA) has posted nearly 100% growth in its trailing 12-month earnings per share without non-recurring items over the past five years, as illustrated in the chart below.

The Redwood City, California-based electronic gaming and multimedia company closed at $95.3 per share on Friday for a market capitalization of about $28 billion.

The stock price has climbed 19% so far this year, though it has underperformed the S&P 500 index by 3.5%.

The stock has a price-earnings ratio of 10.37 versus the industry median of 25 and a price-sales ratio of 5.63 compared to the industry median of 2.34.

Electronic Arts does not pay a dividend.

Wall Street issued an overweight rating for shares of Electronic Arts with an average target price of $110.17.

Disclosure: I have no positions in any securities mentioned in this article.

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This article first appeared on GuruFocus.