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Buy 4 Stocks Set to Beat Earnings Estimates This Week

Nalak Das

Wall Street is witnessing an impressive rally in October after a mixed third quarter. Aside from positive development on the U.S.-China trade war front and reduction in geopolitical concerns, better-than-expected third-quarter earnings results are major drivers of the Wall Street bull run, pushing the benchmark S&P 500 Index to a new all-time high.

So far, more than 200 S&P 500 companies have reported earnings results. Barring a few companies, which have very strong exposure in China, most players provided a fairly stable guidance. Notably, overall guidance is not as disappointing as it was feared initially, easing concerns of a near-term recession.

Better-Than-Expected Third-Quarter Earnings So Far    

Third-quarter earnings results so far are not as disappointing as feared. However, the forecast of overall earnings dip is still looming large.  

As of Oct 28, 205 S&P 500 members reported third-quarter results. Total earnings for these index members are down 0.2% from the same period last year while revenues increased 4.1%. Notably, 78% companies surpassed EPS estimates while 62% beat revenue estimates.

At present, total third-quarter earnings for the S&P 500 Index are expected to be down 3.3% from the prior-year period while revenues are expected to increase 4.1%. This indicates good improvement from an earnings decline of 5% on 4.2% higher revenues, expected at the beginning of the reporting cycle.

4 Stocks Poised to Beat Earnings Estimates This Week

In line with better-than-expected earnings results, four stocks from retail and consumer discretionary sectors are set to beat earnings this week. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows price performance of our four picks year to date.

Boot Barn Holdings Inc. BOOT operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. The company also provides gifts and home merchandise. The Zacks Rank #1 stock has an Earnings ESP of +4.13% for the second quarter of fiscal 2020 (ended September 2019).

Boot Barn Holdings has an expected earnings growth rate of 66.7% and 23.7% for the current quarter and year, respectively. The Zacks Consensus Estimate for the current year has improved 1.2% over the last 30 days.

The company delivered positive earnings surprise in the last four quarters, with an average beat of 26.1%. Boot Barn Holdings is expected to release earnings results on Oct 30, after the closing bell.

Columbia Sportswear Co. COLM designs, sources, markets, and distributes outdoor and active lifestyle apparel, footwear, accessories, and equipment in the United States, Latin America, the Asia Pacific, Europe, the Middle East and Africa, and Canada. The Zacks Rank #1 stock has an Earnings ESP of +0.74% for third-quarter 2019.

Columbia Sportswear has an expected earnings growth rate of 9.9% and 19.2% for the current quarter and year, respectively. The Zacks Consensus Estimate for the current quarter and year has improved 0.6% 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 567.7%. Columbia Sportswear is expected to release earnings results on Oct 30, after the closing bell.

Dunkin' Brands Group Inc. DNKN develops, franchises, and licenses quick service restaurants worldwide. It operates through five segments: Dunkin' U.S., Dunkin' International, Baskin-Robbins International, Baskin-Robbins U.S., and U.S. Advertising Funds. The Zacks Rank #2 stock has an Earnings ESP of +2.15% for third-quarter 2019.

Dunkin' Brands Group has an expected earnings growth rate of 5.2% for the current year. The company delivered positive earnings surprise in the last four quarters, with an average beat of 9.1%. Dunkin' Brands Group is expected to release earnings results on Oct 31, before the opening bell.

Tempur Sealy International Inc. TPX is involved in the development, manufacturing and marketing of bedding products primarily in North America and internationally. It operates through two segments, North America and International. The Zacks Rank #2 stock has an Earnings ESP of +1.55% for third-quarter 2019.

Tempur Sealy International has an expected earnings growth rate of 10.8% and 18.2% for the current quarter and year, respectively. The Zacks Consensus Estimate for the current quarter and year has improved 1.8% and 0.3%, respectively, over the last 30 days.

The company delivered positive earnings surprise in two out of the last four quarters, with an average beat of 3%. Tempur Sealy International is expected to release earnings results on Oct 31, before the opening bell.

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