5 Top Stocks Set to Beat Q3 Earnings Estimates on Wednesday
We are in the middle of the third-quarter 2023 earnings season. So far, the results are better than expected. The season started with weak expectations as the market’s benchmark — the S&P 500 Index — was expected to witness the fourth consecutive quarter of earnings decline. However, the scenario took a complete turnaround as the season progressed.
As of Oct 27, 246 companies have reported results. Total earnings of these companies are up 6% year over year on 2.1% higher revenues, with 79.3% beating EPS estimates and 64.2% beating revenue estimates. For third-quarter 2023, total earnings of the S&P 500 companies are currently expected to be up 1.2% year over year on 1.2% higher revenues.
If this estimation holds, then third-quarter 2023 will be the first quarter of positive earnings growth for the S& 500 Index after three consecutive quarters of earnings decline.
Our Top Picks
We have narrowed our search to five corporate behemoths that are set to beat third-quarter earnings estimates on Wednesday. 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.
Image Source: Zacks Investment Research
APA Corp.’s APA large geographically diversified reserve base and high-quality drilling inventory bode well. APA’s increased focus on the Permian basin, known for its high internal rates of return, is the real driver.
APA’s slew of discoveries in offshore Suriname, through its joint venture with TotalEnergies, is another positive catalyst for the company. Over time, Suriname is expected to become one of APA’s major assets with significant cash flow potential.
APA has an Earnings ESP of +1.29%. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the last 30 days. APA recorded earnings surprises in the last four reported quarters, with an average beat of 13.9%. The company is set to release earnings results on Nov 1, after the closing bell.
American International Group Inc.’s AIG cost-cutting efforts under the AIG 200 transformative program are driving its operational efficiency and margins. Revenues have been growing on the back of the well-performing commercial lines unit. The hardening of insurance rates and new business bodes well for AIG’s premium growth. We expect the 2023 premium income to jump almost 16% year over year.
Divestitures streamlined its business operations as well as enhanced capital allocation and operating leverage. AIG now has around 65.3% ownership interest remaining in Corebridge. Massive underwriting gains and growing net investment income are driving its results.
American International Group has an Earnings ESP of +4.02%. It has an expected earnings growth rate of 47.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days.
AIG recorded earnings surprises in the last four reported quarters, with an average beat of 13.5%. The company is set to release earnings results on Nov 1, after the closing bell.
NiSource Inc. NI continues to add clean assets to the portfolio and retire coal-based units. NI expects to invest $15 billion in modernizing infrastructure, which will further enhance the reliability of its operations.
Within 18 months, nearly 75% of NI’s investment was recovered through rate hikes, providing the company with funds to carry on infrastructure upgrades. NiSource has enough liquidity to meet debt obligations. Our model predicts NI’s total operating expenses to decline in 2023.
NiSource has an Earnings ESP of +18.52%. It has an expected earnings growth rate of 7.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days. NI is set to release earnings results on Nov 1, before the opening bell.
DoorDash Inc. DASH is expanding its global footprint, powered by Wolt and Bbot acquisitions. The Wolt acquisition is helping DASH spread operations in more than 25 countries across the globe and address a larger customer base which is expected to drive top-line growth.
Expanding partner base, including Albertson and Grocery Outlet, will help DASH provide express grocery delivery to consumers. DASH’s revenues have been growing rapidly in the past four years driven by increasing total orders and marketplace GOV.
DoorDash has an Earnings ESP of +6.48%. It has an expected earnings growth rate of 33.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last seven days.
DASH recorded earnings surprises in two out of the last four reported quarters, with an average beat of 0.9%. The company is set to release earnings results on Nov 1, after the closing bell.
Trane Technologies plc TT remains focused on improving the quality of its products and services and operating efficiencies to achieve sustained improvement in earnings and cash flow. TT prioritizes improving its business operating system and innovation through business transformation initiatives and prudent investments.
Trane Technologies has an Earnings ESP of +0.54%. It has an expected earnings growth rate of 20.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days.
TT recorded earnings surprises in the last four reported quarters, with an average beat of 7.3%. The company is set to release earnings results on Nov 1, before the opening bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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NiSource, Inc (NI) : Free Stock Analysis Report
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DoorDash, Inc. (DASH) : Free Stock Analysis Report
