The earnings season is past the halfway point, and so far it has turned out to be a good one.
With around half of the companies in the S&P 500 having already reported, around 70% have posted better than expected quarterly profits, higher than the long-term average of 64%. Around 61% of companies have topped sales estimates which compares to the long-term average of 60%.
By all accounts it has been a good earnings season so far, and if the trend continues the market should be able to remain upbeat as we move deeper into February. There are still a lot of big name companies left to report their quarterly numbers… here are five stocks that are among the names that will report this week.
Electronic Arts (EA)
Video game maker Electronic Arts (EA) will report its fiscal third-quarter numbers after the market close Tuesday. The consensus calls for earnings of $1.93 per share, but the street has a slightly higher expectation with a whisper number of $1.99 or the quarter. Analysts forecast revenue of $1.76 billion. The company has posted big beats on the top and bottom line each of the last three quarters, but a delay in the launch of Battlefield V cost the company a lot in holiday sales which could lead to a disappointing quarter.
EA stock has staged a small rally after a weak second half in 2018 and will need a strong set of quarterly numbers to continue to erase it previous losses. Investors will also look for clues as the amount of impact the hugely popular Fortnite game is having on the company’s digital sales. EA is trading at $88.90 with an average price target of $119.80.
O’Reilly Automotive (ORLY) reports fourth-quarter numbers after the market close Wednesday with the consensus calling for earnings of $3.75 on revenue of $2.33 billion. During the same period last year the company earned $2.77 and reported sales of $2.19 billion. ORLY stock held up very well during the broader market correction in December, and shares have been trading sideways since early November. The stock could finally break out of its tight sideways pattern following the quarterly report.
ORLY stock appears to be reasonably valued with a forward P/E of 19.8. The current valuation is keeping a tight ceiling on the stock but earnings are forecast to rise 17% per annum over the next five years which should drive shares higher if the company is able to continue hitting its quarterly estimates. The company has posted positive earnings surprises the last six quarters, whiles sales have been consistently in-line with expectations. ORLY trades at $352.84 with an average price target of $366.25.
Yum! Brands (YUM)
Yum! Brands (YUM) is scheduled to report earnings before the market open on Thursday. The restaurant chain operator is expected to post earnings of $0.97 per share and sales of $1.59 billon. Both estimates are slightly higher than the same period last year in which the company earned $0.96 and had revenue of $1.58 billion. The company has posted better than expected results on the top and bottom line the last three quarters and has not missed an earnings estimates in eight straight quarters. The street expects another beat this quarter with a whisper number of $1.03.
YUM stock has enjoyed steady gains of the last year and despite the recent market correction shares are now trading just pennies below their all-time high. The market is very bullish on YUM right now which is currently trading at just 19 times earnings and forecast to grow earnings by 12% per annum over the next five years. YUM trades at $94.46 with an average price target of $93.93.
Western Union (WU)
Money transfer provider Western Union (WU) reports its fourth-quarter numbers after the market close Thursday. Analysts forecast earnings of $0.49 on sales of $1.43 billion for the quarter. During the same period last year the company earned $0.41 and had revenue of $1.4 billion. After being stuck in a tight sideways pattern for five months the stock sold off sharply in December during the market correction but has since recovered back to its pre-correction level. WU stock is testing resistance, and if it is able to break through $18.75 following the earnings report it should use that as a new support level moving forward. Last quarter the company missed its revenue estimate while posting better than expected earnings which resulted in a short post-earnings rally. WU trades with a forward P/E of just 9.5 with earnings expected to rise 3.8% per annum over the next five years.
Western Union needs to consistently post better than expected profits in order to lift its earnings growth higher than the forecast for the stock to enjoy steady gains moving forward. WU stock is trading at $18.45 with an average price target of $19.94.
Toy and game makers Mattel (MAT) and Hasbro (HAS) are both reporting quarterly numbers this week. Mattel reports after the market close Thursday while Hasbro will release its numbers before the market open on Friday. Mattel is expected to post a loss of 11 cents per share versus a 72 cent loss last year while the consensus calls for Hasbro to earn $1.68 down from $2.30 during the same period last year. Both stocks fell to 52-week lows during the recent market correction and have since erased those losses and are back to where they were before the selloff and will need better than expected numbers to build on their recoveries.
Wall Street remains weary of the sector in the age of digital gaming, and the stocks can trade wildly on any positive or negative news. This quarter is always of extra importance since it contains the holiday season which can make or break each company’s entire year. MAT stock trades at $12.36 with an average price target of $14.69, while HAS stock is trading at $91.29 with an average price target of $103.18.