It has been a relatively strong earnings season thus far, and although most investors will say that Q2 reports tend to be the most inconsequential, it is encouraging that the markets are touching new all-time highs in the midst of a busy earnings week.
Here at Zacks, our proven Zacks Rank is dependent not only on earnings estimates and estimate revisions, but also actual earnings results. Positive surprises strengthen our outlook on a stock, and of course, one way to ensure positive estimate revisions is by posting strong earnings figures.
With that said, it is always important to target stocks that are moving higher after strong earnings surprises. The post-earnings momentum can last several days or weeks, and a strong outlook can be the catalyst for continued momentum over the course of several months.
Luckily, we can easily pinpoint companies that recently crushed earnings estimates. Check out these three Zacks Rank #1 (Strong Buy) stocks that did just that this earnings season.
1. Caterpillar, Inc. (CAT)
Caterpillar posted adjusted earnings of $1.49 per share, which came in more than 18% higher than the Zacks Consensus Estimate of $1.26 and improved 37% year-over-year. The company recently implemented rigid cost-control strategies, and the bottom line results speak for themselves.
Nevertheless, revenues were up 9.6% to $11.3 billion and exceeded our consensus estimate of $10.9 billion. The company also upped its full-year view, and as a result, shares of this Zacks Rank #1 (Strong Buy) stock have moved nearly 4.6% higher since its report.
2. First Solar, Inc. (FSLR)
First Solar recorded a surprise profit in the most recent quarter, with adjusted earnings of $0.64 coming in well ahead of the Zacks Consensus Estimate, which called for a loss of five cents per share. These results represented a staggering 1,700% positive earnings surprise.
Earnings were lifted by improvements in gross margin and a discrete income tax benefit, but revenues of $623 million were also significantly higher than our consensus estimate of $535.5 million. On top of this, a revenues full-year outlook has helped send shares more than 10% higher since its report was released.
3. Aaron’s, Inc. (AAN)
Despite a tough retail environment, Aaron’s was able to post its fifth-straight earnings beat in the most recent quarter. Indeed, earnings of $0.68 per share surpassed our Zacks Consensus Estimate of $0.58 by a cool 17%.
Revenues of $815.6 million were up about 3.3% year-over-year and above our consensus estimate of $790 million. However, slumping comparable-store sales have kept the stock bogged down since its report, so it will be interesting to see what will happen next.
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