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5 Large-Cap Stocks Set to Beat Earnings Estimates This Month

Nalak Das

Wall Street is enjoying an impressive bull-run so far this year despite several headwinds. The lingering trade conflict and tariff war with China, forecast of global economic slowdown this year by several important economic agencies, global manufacturing downturn (especially in the Eurozone, China and the United States), and geopolitical concerns in the Middle-East and Brexit have resulted in severe market volatility.

In spite of market fluctuations, Wall Street overall remains firmly on the growth trajectory with all three major stock indexes in positive territory. The Dow, the S&P 500 and Nasdaq Composite ---- have gained 14.8%, 19.1% and 21.9%, respectively, year to date.

Meanwhile, third-quarter 2019 earnings results so far are not as disappointing as expected initially. However, the forecast of overall earnings dip in the third quarter is still looming large.  Despite this, a few top-ranked large-cap corporates are posed to handsomely beat earnings estimates this month.    

Third-Quarter Earnings at a Glance

As of Oct 18, 74 S&P 500 members reported third-quarter earnings results. Total earnings for these index members are down 3% from the same period last year on 3.2% higher revenues. Notably, 83.8% companies surpassed EPS estimates while 59.5% beat revenue estimates.

At present, total third-quarter earnings for the S&P 500 Index are expected to be down 4% from the prior-year period on 4.1% higher revenues. This is a good improvement from an earnings decline of 5% on 4.2% higher revenues, expected in the beginning of the reporting cycle (Read More: Are Q3 2019 Earnings Results Really That Good?).

5 Large-Cap Stocks Poised to Beat on Earnings

We have used several selection criteria for our picks. First, we selected large-cap stocks as these companies are doing business for a long time and their stock prices are generally stable. Second, these stocks have rallied in the past three months and still have upside left.

Third, all these stocks are expected to release earnings reports this month and have a positive Earnings ESP.  Finally, each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank 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%.

Chipotle Mexican Grill Inc. CMG operates quick-casual and fresh Mexican food restaurant chains. It offers a focused menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. The company has an Earnings ESP of +2.51% for third-quarter 2019.

Chipotle Mexican Grill has an expected earnings growth rate of 46.3% and 48.2% for the current quarter and year, respectively. The Zacks Consensus Estimate for the current quarter and year has improved 0.3% and 0.4%, respectively, over the last 30 days.

The company delivered positive earnings surprise in the last four quarters, with an average beat of 13.2%. The stock has soared 13.3% in the past three months. Chipotle Mexican Grill is expected to release earnings results on Oct 22, after the closing bell.



Vertex Pharmaceuticals Inc. VRTX is focused on the discovery, development, and commercialization of small molecule drugs targeting serious diseases. Its main area of emphasis is cystic fibrosis (CF). The company has an Earnings ESP of +2.24% for third-quarter 2019.

Vertex Pharmaceuticals has an expected earnings growth rate of 3.7% and 12.5% for the current quarter and year, respectively. The Zacks Consensus Estimate for the current quarter and year has improved 0.9% and 0.2%, respectively, over the last 30 days.

The company delivered positive earnings surprise in the last four quarters, with an average beat of 17.9%. The stock has gained 1.2% in the past three months. Vertex Pharmaceuticals is expected to release earnings results on Oct 23.



American Electric Power Company Inc. AEP is an electric public utility provider, engaged in the generation, transmission and distribution of electricity for sale to retail and wholesale customers in the United States. It generates electricity using coal and lignite, natural gas, nuclear, hydroelectric, solar, wind, and other energy sources. The company has an Earnings ESP of +2.68% for third-quarter 2019.

American Electric Power has an expected earnings growth rate of 4.8% and 5.3% for the current quarter and year, respectively. The Zacks Consensus Estimate for the current quarter and year has improved 8.3% and 0.5%, respectively, over the last 30 days.

The company delivered positive earnings surprise in the last four quarters, with an average beat of 3%. The stock has climbed 4.4% in the past three months. American Electric Power is expected to release earnings results on Oct 24, before the opening bell.



Verizon Communications Inc. VZ offers communication, information and entertainment services in the form of local phone service, long distance, wireless and data services to consumers, businesses, and governmental agencies worldwide. The company has an Earnings ESP of +0.40% for third-quarter 2019.

Verizon has an expected earnings growth rate of 1.6% and 2.1% for the current quarter and year, respectively. The Zacks Consensus Estimate for the current year has improved 0.2% over the last 30 days.

The company delivered positive earnings surprise in the last four quarters, with an average beat of 1%. The stock has surged 10% in the past three months. Verizon is expected to release earnings results on Oct 25, before the opening bell.



V.F. Corp. VFC engages in the design, production, procurement, marketing and distribution of branded lifestyle apparel, footwear, and related products for men, women and children in the Americas, Europe and the Asia-Pacific. It operates through four segments: Outdoor, Active, Work, and Jeans. The company has an Earnings ESP of +0.51% for second-quarter fiscal 2020 (ended September 2019).

V.F. Corp has an expected earnings growth rate of 14.6% for the next year. The company delivered positive earnings surprise in the last four quarters, with an average beat of 9.6%. The stock has gained 6.5% in the past three months. V.F. Corp is expected to release earnings results on Oct 25, before the opening bell.



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American Electric Power Company, Inc. (AEP) : Free Stock Analysis Report
 
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
 
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
 
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
 
V.F. Corporation (VFC) : Free Stock Analysis Report
 
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