Buy 5 Stocks That Are Set to Beat Earnings Results Next Week
Five companies will report fourth-quarter 2021 earnings results next week. These are: SCHW, JBHT, SLB, BOKF and CSX.
The fourth-quarter 2021 earnings season will gather pace from Jan 14 as banking behemoths are set to release their financial numbers. Market participants have high expectations from this earnings season as overall earnings of corporate America is likely to remain robust after skyrocketing in the first three quarters of 2021.
Five companies are slated to release their fourth-quarter 2021 earnings results next week. A favorable Zacks Rank and a possible earnings beat have made these stocks attractive from investors’ point of view. These are — The Charles Schwab Corp. SCHW, J.B. Hunt Transport Services Inc. JBHT, CSX Corp. CSX, Schlumberger Ltd. SLB and BOK Financial Corp. BOKF.
Good Start to Fourth-Quarter Earnings
As of Jan 12, 20 S&P 500 companies have reported fourth-quarter 2021 results. Total earnings of these companies are up 29.3% year over year on 12.8% higher revenues with 85% beating EPS estimates and 90% surpassing revenue estimates.
Total fourth-quarter earnings of the market's benchmark — the S&P 500 Index — are projected to climb 19.9% from the same period last year on 11.9% higher revenues, following 41.4% year-over-year earnings growth on 17.4% higher revenues in the third quarter, 95% year-over-year earnings growth on 25.3% higher revenues in the second quarter and 49.3% year-over-year earnings growth on 10.3% higher revenues in first-quarter 2021.
The first three quarters of this year were favorably impacted since the preceding quarters of last year were affected by the pandemic-induced lockdowns and restriction. However, the U.S. economy started reopening at a very slow pace since the beginning of the fourth quarter of 2020.
Q4 2021 At a Glance
The U.S. economy continued to witness a strong recovery from the pandemic-led havoc in the fourth quarter. Nationwide deployment of COVID-19 vaccines on a priority basis, massive fiscal stimulus and continuation of easy money policies by the Fed resulted in a faster-than-expected reopening of the economy.
Strong pent-up demand supported by record-high personal savings, labor shortage and supply-chain disruptions resulted in a spike in inflation. Although the Fed initially considered the inflation to be transitory, it did recognize in its December FOMC meeting that inflation is no longer transitory and needs harsh measures to contain it.
The rapid spread of the highly infectious Delta and Omicron variants of the coronavirus also disrupted normal economic activities to some extent. However, we remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed.
Our Top Picks
Five companies will report fourth-quarter 2021 earnings results next week. Each of these stocks carries either a Zacks Rank #1 (Strong Buy) or 2 (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 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 last quarter.
Image Source: Zacks Investment Research
The Charles Schwab remains focused on enhancing trading revenues, which have been under pressure for a few years. For this, SCHW continues to undertake several initiatives including lowering its basic online equity and ETF trade commissions to zero and reducing fees for the Schwab market cap-weighted index mutual funds.
Further, it launched Schwab Stock Slices, through which investors will be able to own shares of any company in the S&P 500 Index starting at $5 each, even though these shares cost more. These efforts, aimed at building client base and the acquisition of TD Ameritrade, are likely to lead to further improvement in the trading income of Charles Schwab.
SCHW has an Earnings ESP of +0.65%. It has an expected earnings growth rate of 20.2% for the current year. The Zacks Consensus Estimate for current-year earnings improved 4% over the last 7 days.
Charles Schwab recorded earnings surprises in the last four reported quarters, with an average beat of 3.7%. This Zacks Rank #1 company is set to release earnings results on Jan 18, before the opening bell.
J.B. Hunt Transport Services is benefiting from strong performances across all its segments. The Dedicated Contract Services unit of JBHT is being aided by fleet productivity improvement and a rise in average revenue producing trucks.
The Integrated Capacity Solutions unit J.B. Hunt of is gaining from a favorable customer freight mix, as well as higher contractual and spot rates. Additionally, increase in load count and revenue per load is supporting growth of the Truck segment.
JBHT has an Earnings ESP of +1.54%. It has an expected earnings growth rate of 18.8% for the current year. The Zacks Consensus Estimate for current-year earnings improved 4% over the last 7 days.
J.B. Hunt recorded earnings surprises in the last four reported quarters, with an average beat of 0.5%. This Zacks Rank #2 company is set to release earnings results on Jan 18, after the closing bell.
CSX offers rail-based freight transportation services like traditional rail service, transport of intermodal containers and trailers apart from rail-to- truck transfers. With a healthy freight environment, CSX is benefiting from growth across all its businesses. In the first nine months of 2021, total revenues climbed 17% with 9% rise in volumes.
Primarily due to the improved freight scene, shares of CSX have outperformed its industry so far this year. The July 2021 acquisition of Quality Carriers is aiding the company’s top line. CSX’s efforts to reward its shareholders are encouraging.
CSX has an Earnings ESP of +0.17%. It has an expected earnings growth rate of 13.2% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.6% over the last 7 days.
CSX recorded earnings surprises in the three out of last four reported quarters, with an average beat of 5.8%. This Zacks Rank #2 company is set to release earnings results on Jan 20, after the closing bell.
Schlumberger supplies technology for reservoir characterization, drilling, production, and processing to the oil and gas industry worldwide. SLB operates in four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems.
Schlumberger is the largest oilfield services player, with a presence in every energy market across the globe. Being the leading provider of technology for complex oilfields, SLB is better positioned to take up new offshore projects in international markets. Schlumberger is targeting net-zero greenhouse gas emissions by 2050.
SLB has an Earnings ESP of +2.86%. It has an expected earnings growth rate of 50.7% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.5% over the last 7 days.
Schlumberger recorded earnings surprises in the last four reported quarters, with an average beat of 12%. This Zacks Rank #2 company is set to release earnings results on Jan 21, before the opening bell.
BOK Financial is a regional financial services company. With continued economic recovery, BOK Financial is poised for decent growth in loan and deposit balances. Decent liquidity and investment-grade credit ratings should enable BOKF to navigate any economic uncertainty going forward. Improved capital deployment initiatives and the asset quality of BOK Financial are also encouraging.
Over the past several years, BOK Financial has transformed from merely being a bank in Oklahoma to a chief financial service provider, by expanding into carefully selected markets in neighboring states. Since 2016, BOKF completed a number of acquisitions expanding its asset management business and footprint. BOK Financial strengthened its foothold in Colorado and Arizona following its merger with Denver-based CoBiz Financial in 2018.
BOKF has an Earnings ESP of +3.64%. The Zacks Consensus Estimate for current-year earnings improved 0.9% over the last 7 days. BOK Financial recorded earnings surprises in the last four reported quarters, with an average beat of 25.4%. This Zacks Rank #2 company is set to release earnings results on Jan 19, before the opening bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Schlumberger Limited (SLB): Free Stock Analysis Report
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The Charles Schwab Corporation (SCHW): Free Stock Analysis Report
BOK Financial Corporation (BOKF): Free Stock Analysis Report
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