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Forget Walmart's Miss, Buy These Stocks Likely to Beat Earnings

Ryan McQueeney
Stocks opened lowered on Tuesday after Walmart's earnings report disappointed investors. Here's a look at three other stocks that are expected to beat earnings estimates this week.

After Monday’s market holiday, traders on Wall Street returned with the hopes of kicking the shortened trading week off strong on the back of positive earnings results from several marquee companies. However, stocks opened lowered on Tuesday after one of those companies—Walmart WMT—disappointed investors.

Walmart posted its fourth-quarter earnings report before the opening bell today, tallying earnings of $1.33 per share that missed the Zacks Consensus Estimate of $1.36. This result was a modest 2.3% improvement from the year-ago period.

Management also note that U.S. comparable-store sales (excluding fuel) gained 2.6%, while overall traffic rose 1.6%. E-commerce sales in the U.S. expanded a respectable 23%, although that growth rate is sluggish compared to some of Walmart’s recent quarters (also read: Walmart Q4 Earnings Miss, Sales Beat, Issues FY19 View).

Shares of Walmart sunk more than 9% in early morning trading Tuesday, meaning that some investors were likely burned badly by this earnings play. Nevertheless, there are several more reports slated for this week, and landing on a few positive surprises could quickly turn the tides over the coming days.

Luckily, Zacks Premium customers can prepare for this opportunity by utilizing the Earnings ESP Screener in order to search for stocks that are expected to beat. Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Today, we are giving our readers a very special treat: a free look at three of the strongest stocks that are popping up on our Earnings ESP Screener right now. Check them out:

1.       Owens Corning Inc. (OC)

Owens Corning is a world leader in building materials systems and composite solutions. The company is scheduled to release its latest quarterly financial results before the market opens on Feb. 21. OC is currently sporting a Zacks Rank #2 (Buy) and has an Earnings ESP of 2.73%.

Based on our current Zacks Consensus Estimates, we expect Owens to report earnings growth of at least 43% and revenue growth of 9.8%. The company missed our consensus estimate for earnings in its most recent report but is otherwise perfect over the last 13 quarters.

 

2.       The Boston Beer Company, Inc. (SAM)

The Boston Beer company is an American brewer of craft-style beers, including its flagship Samuel Adams Boston Lager and the Angry Orchard line of hard ciders. The company is scheduled to release its latest quarterly report after the market closes on Feb. 21. SAM is currently holding a Zacks Rank #1 (Strong Buy) and an Earnings ESP of 29.18%.

Year-over-year earnings comparisons will be tough for SAM this quarter, but the company has put together four huge beats in a row, and analyst sentiment has clearly warmed recently.

 

3.       Air Lease Corporation (AL)

Air Lease Corporation is an aircraft leasing company principally engaged in purchasing commercial aircraft and leasing to airlines around the world. The firm is slated to announce its latest quarterly earnings results after the closing bell on Feb. 22. AL is currently sporting a Zacks Rank #1 (Strong Buy) and has an Earnings ESP of 0.46%.

Air Lease is a strong earnings performer, missing the Zacks Consensus Estimate just once over the past five years. Still, estimates are calling for the company’s EPS figure to slip more than 2% year-over-year, so this is not exactly a hot growth stock right now.

 

Want more analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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Air Lease Corporation (AL) : Free Stock Analysis Report
 
Boston Beer Company, Inc. (The) (SAM) : Free Stock Analysis Report
 
Owens Corning Inc (OC) : Free Stock Analysis Report
 
Wal-Mart Stores, Inc. (WMT) : Free Stock Analysis Report
 
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