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5 Consumer-Centric Stocks to Buy Ahead of Earnings Next Week

The third-quarter 2022 earnings season is gaining pace. Next week will be biggest this reporting cycle as more than 1,700 companies are lined up to release their financial numbers.

So far, third-quarter 2022 earnings results are more in line with expectations. We have identified five U.S. consumer-centric (both consumer discretionary and consumer staples) stocks with a favorable Zacks Rank that are set to beat earnings results next week.

Investment in these stocks should be fruitful as an earnings beat is expected to drive stock prices going forward. These companies are — Darling Ingredients Inc. DAR, Vista Outdoor Inc. VSTO, e.l.f. Beauty Inc. ELF, Crocs Inc. CROX and fuboTV Inc. FUBO.

Q3 at a Glance

Like the first half, the third quarter of 2022 also remained tough for the U.S. economy. Various measures of inflation remained elevated at a 40-year high. The Fed has hiked the benchmark interest rate by 3% so far in 2022, and it was in the range of 3.25% to 3.5% at the end of the third quarter. Moreover, the central bank has started to reduce its $9 trillion balance sheet systematically since June.

Despite these aggressive monetary policies adopted by the Fed, inflation is showing no signs of declining. The complete devastation of the global supply-chain system and the shortage of labor continued to put pressure on businesses in the form of higher input costs and wages.

The lingering war between Russia and Ukraine and the lockdown in China due to the resurgence of COVID-19 infections were the major hindrances to the restoration of the global supply-chain system. Agencies like the IMF, the World Bank and the OECD have warned of a possible global recession in 2023.

Q3 Earnings Results So Far

Our estimates for third-quarter earnings of the market’s benchmark, the S&P 500 Index, has shown a gradual decline in the past three and a half months. As of Oct 26, 170 companies of the S&P 500 Index have reported results.

Total earnings of these companies are down 3.2% from the same period last year on 9.7% higher revenues, with 76.5% beating EPS estimates and 67.6% beating revenue estimates. Our current estimate has projected that total earnings of the S&P 500 Index to be up 0.1% year over year on 9.2% higher revenues.

Our Top Picks

Five consumer-centric companies will report earnings results next week. Each of these stocks carries a Zacks Rank #2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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 releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The chart below shows the price performance of our five picks in the last quarter.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Darling Ingredients is a provider of rendering, cooking oil and bakery waste recycling and recovery solutions. DAR collects and transforms all aspects of animal by-product streams into broadly used and specialty ingredients, such as gelatin, edible fats, feed-grade fats, animal proteins and meals, plasma, pet food ingredients, organic fertilizers, yellow grease, fuel feedstock, green energy, natural casings and hides.

Darling Ingredients also provides grease trap services to food service establishments, environmental services to food processors and sells restaurant cooking oil delivery and collection equipment.

DAR has an Earnings ESP of +0.82%. It has an expected earnings growth rate of 41% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last seven days.

Darling Ingredients recorded earnings surprises in three out of the last four reported quarters, with an average beat of 3.9%. The company is set to release earnings results on Nov 8, after the closing bell.

Vista Outdoor is the parent company of renowned brands that design, manufacture and market sporting and outdoor products. VSTO’s operating segment includes Outdoor Products and Sporting Products. Its brand portfolio includes Remington Ammunition, Bushnell, CamelBak, Bushnell Golf, Foresight Sports, Fiber Energy Products, Bell Helmets, Camp Chef, Giro, QuietKat, Stone Glacier, Federal Ammunition and more.

Vista Outdoor principally serves outdoor enthusiasts, golfers, cyclists, backyard grillers, campers, hunters, recreational shooters, athletes, as well as law enforcement and military professionals.

VSTO has an Earnings ESP of +4.75%. Vista Outdoor recorded earnings surprises in the last four reported quarters, with an average beat of 20.4%. The company is set to release earnings results on Nov 2, after the closing bell.

e.l.f. Beauty operates as a cosmetic company. ELF’s cosmetic category primarily consists of face makeup, eye makeup, lip products, nail products and cosmetics sets/kits, excludes beauty tools and accessories, such as brushes and applicators.

ELF has an Earnings ESP of +4.28%. It has an expected earnings growth rate of 7.1% for the current year (ending March 2023). The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 30 days.

e.l.f. Beauty recorded earnings surprises in the last four reported quarters, with an average beat of 77%. The company is set to release earnings results on Nov 2, after the closing bell.

Crocs designs, develops, manufactures, markets and distributes casual lifestyle footwear and accessories for men, women and children worldwide. Solid consumer demand, as well as broad-based growth across all markets, channels and categories, contributed to the strong quarterly results of CROX.

Clogs, sandals and Jibbitz remained the key growth drivers. Crocs’ focus on product innovation and marketing, digital capabilities and potential gains from the HEYDUDE buyout bode well. Increased focus on the Crocs mobile app and global social platforms have aided digital sales.

CROX has an Earnings ESP of +1.48%. It has an expected earnings growth rate of 20.7% for the current year. Crocs recorded earnings surprises in the last four reported quarters, with an average beat of 21.9%. The company is set to release earnings results on Nov 3, before the opening bell.

fuboTV operates a live TV streaming platform for live sports, news, and entertainment content in the United States and internationally. FUBO’s fuboTV platform allows customers to access content through streaming devices, as well as on SmartTVs, computers, mobile phones, and tablets.

FUBO has an Earnings ESP of +2.70%. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the last 60 days. fuboTV is set to release earnings results on Nov 4, before the opening bell.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Darling Ingredients Inc. (DAR) : Free Stock Analysis Report
 
Crocs, Inc. (CROX) : Free Stock Analysis Report
 
Vista Outdoor Inc. (VSTO) : Free Stock Analysis Report
 
e.l.f. Beauty (ELF) : Free Stock Analysis Report
 
fuboTV Inc. (FUBO) : Free Stock Analysis Report
 
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