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5 Big Cap Earnings All Stars to Watch This Week

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·3 min read
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Earnings season picks up steam this week as over 400 companies are expected to report, many of them being large cap companies.

The large caps have outperformed over the last few years as money rotated into companies that could withstand all the stresses and pressures of the pandemic.

Some of these companies have perfect 5-year earnings surprise track records, even beating through the early months of the pandemic. It’s impressive.

But with inflation, supply chain issues, labor shortages and now the Omicron outbreak disrupting the global economy, what will these companies say about the outlook for 2022?

5 Big Cap Earnings All Stars

1.    Microsoft MSFT

Microsoft has a perfect 5-year earnings surprise track record. It’s an amazing streak given the pandemic over the last 2 years.

Microsoft shares hit new highs in 2021, but in 2022 they have fallen over 10%.

Shares aren’t cheap, with a forward P/E of 32.4.

Is a 10% pullback in Microsoft a buying opportunity or does it have more to fall?

2.    AT&T Inc. T

AT&T has beat 4 quarters in a row, which is a solid earnings surprise streak.

AT&T shares are up 7.1% year-to-date, bucking the bearish trend. But don’t be misled, the shares hit 10-year lows in 2021 so they were likely oversold.

AT&T trades with a forward P/E of just 8.3 and it pays a big dividend.

Is AT&T a place to hide out in during 2022’s volatility or is it a value trap?

3.    Tesla TSLA

Tesla has beat 3 quarters in a row but Tesla investors have never really cared if they beat or missed.

Shares are down 12% year-to-date on the growth stock sell-off but Tesla shares are still very expensive, with a forward P/E of 109.

Still, Tesla investors have never cared about valuation either.

Is the weakness in the shares a buying opportunity?

4.    ServiceNow NOW

ServiceNow hasn’t missed in 5 years. This is an incredible performance given the pandemic stresses.

After soaring for the last 5 years, gaining 483% during that time, shares have fallen 19% in 2022.

ServiceNow still isn’t cheap on a forward P/E basis. It trades at 71x.

Will another beat reverse ServiceNow’s shares or will it have to get cheaper to finally rally again?

5.    Edwards Lifesciences Corp. EW

Edwards Lifesciences, the heart disease medical innovator, has beat 3 quarters in a row. It has missed only 3 times in the last 5 years so it has a good long-term track record of beating.

Like other growth stocks, shares have been in retreat in 2022, falling nearly 15% year-to-date.

Edwards Lifesciences is still not a cheap stock, however, with a forward P/E of 44x.

Is this a buying opportunity in Edwards Lifesciences or should investors wait on the sidelines?

[In full disclosure, Tracey owns shares of MSFT in her own personal portfolio.]


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