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5 Large-Cap Stocks to Buy Before Their Earnings After Market

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The second-quarter 2021 earnings season got off to a flying start with better-than-expected results. Market participants have high expectations as corporate profits are expected to have soared in the last quarter.

The earnings results so far have shown all-round strength. The aggregate total quarterly earnings of the market's benchmark — the S&P 500 Index — are expected to reach a new all-time high. We have seen impressive momentum on the revenue front also. (Read More: The Tech Sector's Enormous Earnings Power)

In line with the strong earnings momentum, five large-cap (market capital > $10 billion) stocks are set to beat on earnings results today after market close. The combination of a favorable Zacks Rank and a possible earnings beat are likely to drive their stock prices going forward.

Robust Q2 Earnings So Far

As of Jul 28, 195 companies of the S&P 500 Index reported results. Total earnings of these companies were up 105% year over year on 22.3% higher revenues. Moreover, 90.8% of these companies beat their earnings per share (EPS) estimates and 86.2% surpassed revenue estimates.

For the second quarter as a whole, total earnings of the S&P 500 Index are expected to be up 83.9% year over year on 21.3% higher revenues. This indicates an improvement over the initial projection of EPS increasing 62.2% from the same period last year on 18.2% higher revenues.

These estimates are impressive primarily because second-quarter 2020 witnessed a lockdown owing to the global outbreak of the deadly coronavirus.Notwithstanding favorable comparisons with last year, second-quarter 2021 earnings estimates indicate double-digit growth from the pre-pandemic second quarter of 2019. In fact, the earnings estimates for 2021 have been growing steadily since the beginning of this year.

Our Top Picks

We have narrowed down our search to five large-cap stocks that are slated to release earnings results today after the closing bell. 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 positive Earnings ESP and a Zacks Rank #3 (Hold) or better, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after 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

Fortinet Inc. FTNT is a provider of network security appliances and Unified Threat Management network security solutions to enterprises, service providers and government entities worldwide.

Fortinet is benefiting from rising demand for security and networking products amid the coronavirus crisis as a huge global workforce is working remotely. It is also benefiting from robust growth in Fortinet Security Fabric, cloud and Software-defined Wide Area Network offerings. Moreover, continued deal wins, especially those of high value, are the key drivers.

The company has an Earnings ESP of +2.11% for second-quarter 2021. It has an expected earnings growth rate of 11.6% for the current year. The Zacks Consensus Estimate for the current year has improved 0.3% over the last 30 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 14.7%.

Mohawk Industries Inc. MHK designs, manufactures, sources, distributes, and markets flooring products for remodeling and construction of residential and commercial spaces in the United States, Europe, Russia and internationally. It operates through three segments: Global Ceramic, Flooring North America and Flooring Rest of the World.

Amid the pandemic, people in the United States and abroad are more willing to invest in buying homes with more spaces to accommodate work and education. Furthermore, consumers are continuing to invest in their homes for repair & remodeling activities, and new flooring plays a major role in most remodeling projects. Mohawk has been benefiting from this trend.

The company has an Earnings ESP of +9.11% for second-quarter 2021. It has an expected earnings growth rate of 57.2% for the current year. The Zacks Consensus Estimate for the current year has improved 1.1% over the last 7 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 162.8%.

Deckers Outdoor Corp. DECK is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports, and other lifestyle-related activities.

The company’s focus on expanding brand assortments, introducing more innovative lines of products, targeting consumers digitally and optimizing omni-channel distribution have been contributing to its performance. Deckers is targeting profitable and underpenetrated markets, and remains focused on product innovations, store expansion and enhancing e-commerce capabilities.

The company has an Earnings ESP of +41.18% for first-quarter fiscal 2022. It has an expected earnings growth rate of 11.6% for the current year (ending March 2022). The Zacks Consensus Estimate for the current year has improved 0.5% over the last 7 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 60.9%.

Welltower Inc. WELL is a real estate investment trust that is engaged in investments with seniors housing operators, post-acute providers and health systems. Its portfolio is concentrated in major, high-growth markets in the United States, Canada and the U.K.

Welltower has a diversified portfolio in the healthcare real estate industry that allows it to explore opportunities in different markets based on individual market dynamics. It usually leases its healthcare facilities under "triple net" leases, where the tenant pays all taxes, insurance and maintenance for the properties in addition to rent.

The company has an Earnings ESP of +1.36% for second-quarter 2021. The Zacks Consensus FFO Estimate for the current year has improved 1.9% over the last 30 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 5.8%.

Gaming and Leisure Properties Inc. (GLPI) is a self-administered, self-managed REIT primarily engaged in the property business, which will consist of owning, acquiring, developing, expanding, managing, and leasing gaming and related facilities.

The company has an Earnings ESP of +1.64% for second-quarter 2021. The Zacks Consensus FFO Estimate for the current year has improved 0.6% over the last 7 days. It recorded earnings surprises in the last four reported quarters, with an average beat of 2.1%.


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

Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report

Fortinet, Inc. (FTNT) : Free Stock Analysis Report

Mohawk Industries, Inc. (MHK) : Free Stock Analysis Report

Gaming and Leisure Properties, Inc. (GLPI) : Free Stock Analysis Report

Welltower Inc. (WELL) : Free Stock Analysis Report

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