We are in the middle of the first-quarter 2022 earnings season. So far, earnings are better than expected although some major corporates have issued a weak outlook. Earnings results of corporate America are likely to return to normalcy after last year’s astonishing growth due to pandemic-led favorable comparisons.
This week is the biggest of the reporting cycle, with more than 1,500 companies set to release their quarterly numbers. From these, we have selected five large-cap companies with a favorable Zacks Rank that are expected to beat earnings estimates. These are —
EOG Resources Inc.
EOG
,
Cigna Corp.
CI
,
Host Hotels & Resorts Inc.
HST
,
Vertex Pharmaceuticals Inc.
VRTX
and
BeiGene Ltd.
BGNE
.
Solid Q1 Earnings Results So Far
As of Apr 29, 276 S&P 500 companies reported earnings results. Year over year, the total earnings of these companies are up 3.9% on 13.4% higher revenues. Moreover, 80.8% of these companies beat earnings estimates and 74.6% beat revenue estimates.
For the first quarter as a whole, total earnings of the S&P 500 Index are expected to be up 7.6% year over year on 12.1% higher revenues. The current estimate is well above 4.3% year-over-year growth on 10% higher revenues for the S&P 500 estimated at the beginning of the reporting cycle.
Our Top Picks
Five large-cap (market capital > $15 billion) companies with a favorable Zacks Rank will report first-quarter earnings results this week. Each of these stocks carries a Zacks Rank #1 (Strong Buy) and has a positive
Earnings ESP
. 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%. 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
EOG Resources
has an attractive growth profile, a huge inventory of drilling opportunities, upper quartile returns and a disciplined management team. EOG has significant acreages in oil shale plays like Delaware, Bakken and Eagle Ford. EOG Resources has estimated roughly 11,500 net undrilled premium locations, brightening the production outlook.
Also, EOG’s balance sheet is significantly less levered than the composite stocks belonging to the industry. For this year, EOG Resources has laid out a plan to generate $6.4 billion in free cashflow. With the employment of premium drilling, EOG is reducing its cash operating costs per barrel of oil equivalent, thereby aiding its bottom line.
Zacks Rank #1 EOG Resources has an Earnings ESP of +0.89%. It has an expected earnings growth rate of 88.5% for the current year. The Zacks Consensus Estimate for current-year earnings improved 1.8% over the last 7 days.
EOG recorded earnings surprises in three of the last four reported quarters, with an average beat of 7.1%. The company is set to release
earnings results
on May 5, after the closing bell.
Host Hotels & Resorts
is a leading lodging real estate investment trust, engaged in the ownership, acquisition, and redevelopment of luxury and upper-upscale hotels in the United States and abroad. With a solid portfolio of luxury and upper-upscale hotels across lucrative markets, HST is likely to benefit from the relaxation of regulations, acceleration in vaccine distribution and improving supply-demand fundamentals.
Strategic acquisitions and value-enhancement initiatives are likely to aid long-term growth in Host Hotels & Resorts’ profitability. The capital-recycling program and a strong balance sheet augur well. Also, the recovery in the transient and group businesses and the continued strength in the leisure business are likely to help HST achieve an improvement in revenue per available room.
Zacks Rank #1 Host Hotels & Resorts has an Earnings ESP of +7.32%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 2.2% over the last 30 days.
HST recorded earnings surprises in the last four reported quarters, with an average beat of 107.7%. The company is set to release
earnings results
on May 4, after the closing bell.
Vertex
’s cystic franchise sales continue to grow despite the impact of the pandemic. Trikafta/Kaftrio’s early approval/launch was a significant milestone. New reimbursement agreements in ex-U.S. markets and label expansions to younger age groups in the United States are driving VRTX’s Trikafta/Kaftrio sales higher.
Vertex’s non-CF pipeline is progressing rapidly with data from multiple programs expected in the next few months. Vertex faces only minimal competition in its core CF franchise. Vertex has collaborations with several companies.
Zacks Rank #2 Vertex has an Earnings ESP of +0.87%. It has an expected earnings growth rate of 11.8% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.1% over the last 60 days.
VRTX recorded earnings surprises in the last four reported quarters, with an average beat of 10.1%. The company is set to release
earnings results
on May 5, after the closing bell.
Cigna
’s revenues have been increasing consistently for the past several years, driven by acquisitions, superior operating performance and, high-quality products and services portfolio. CI’s 2018 buyout of Express Scripts diversified its business by adding pharmacy benefits to insurance operations.
Business streamlining by divesting Group Life and Disability insurance business will help Cigna focus on core growth areas. An expected increase in medical membership bodes well. For 2022, CI expects adjusted income from operations to be at least $22.40 per share.
Zacks Rank #2 Cigna has an Earnings ESP of +6.26%. It has an expected earnings growth rate of 9.9% for the current year. CI recorded earnings surprises in the last four reported quarters, with an average beat of 6%. The company is set to release
earnings results
on May 6, before the opening bell.
BeiGene
discovers, develops, manufactures, and commercializes medicines for cancer therapeutics in the People’s Republic of China, the United States, and internationally. BGNE’s clinical-stage drug candidates include BGB-3111, BGB-283, BGB-290, and BGB-A317.
Zacks Rank #2 BeiGene has an Earnings ESP of +27.65%. The Zacks Consensus Estimate for current-year earnings improved 0.8% over the last 30 days. BGNE recorded earnings surprises in two out of the last four reported quarters, with an average beat of 14.6%. The company is set to release
earnings results
on May 5.
Stay on top of upcoming earnings announcements with the
Zacks Earnings Calendar
.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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