As the S&P 500 earnings season heats up, nearly 80 companies are set to report next week, with tech giants like Alphabet, Tesla, and Intel among the key names. Thus far, the season has seen an impressive 87% of companies beating analyst expectations.
CNBC Pro, using data from Bespoke Investment Group, has identified stocks with a history of exceeding earnings estimates and seeing positive stock movement post-announcement, including Deckers Outdoors, ServiceNow, and T-Mobile, all of which are poised to release their results in the coming days.
As the S&P 500 earnings season gains momentum, investors are keenly watching for companies that can consistently beat analyst expectations. Next week, a significant cohort of nearly 80 S&P 500 companies are slated to announce their financial results, with tech giants like Alphabet, Tesla, and Intel taking center stage.
The current earnings season has shown a strong trend of positive surprises. Data from FactSet reveals that approximately 87% of the roughly 40 S&P 500 companies that have reported so far have surpassed analyst forecasts. This robust performance sets a positive tone for the upcoming reporting period.
CNBC Pro, in collaboration with Bespoke Investment Group, has identified companies with a proven track record of exceeding earnings estimates at least 75% of the time, coupled with a history of their stock price rising by at least 1% post-earnings.
Deckers Outdoors: A Consistent Performer
Deckers Outdoors (DECK) stands out at the top of this elite list. The company has a remarkable history of beating analyst earnings consensus more than 94% of the time. Furthermore, its shares have historically seen an average gain of 1.54% on the days it reports quarterly results.
Adding to the positive outlook, Jefferies recently upgraded Deckers Outdoors to a "buy" rating from "hold," increasing its price target to $130 from $110, suggesting a potential 22% upside. Analyst Blake Anderson cited the strong potential for product innovation and enhanced segmentation within brands like Hoka and Ugg. Anderson noted, "We especially like HOKA's segmentation across more performance and into lifestyle, where it can leverage learnings from UGG. While HOKA is a key debate, UGG should also be more durable than the market expects." LSEG data indicates a divided analyst sentiment, with 14 out of 27 analysts rating the stock as a buy or strong buy, while the remainder hold a hold or underperform rating.
ServiceNow: AI Relevance Drives Growth
Cloud-based enterprise platform provider ServiceNow (NOW) also features prominently on the list. The company is set to report earnings on Wednesday and historically sees an average stock jump of 2.7% following its earnings releases.
Goldman Sachs recently reiterated its "buy" rating on ServiceNow, emphasizing its strategic importance in the enterprise AI stack. Analyst Gabriela Borges wrote, "We continue to believe the single biggest driver of a stock rerating will be whether ServiceNow can prove its relevance in the enterprise AI stack, and we believe a stabilization in organic revenue and upward revisions to WholeCo revenue will help demonstrate this relevance." This aligns with the broader Wall Street consensus, as LSEG data shows 46 out of 50 analysts rate ServiceNow as a buy or strong buy.
T-Mobile: Strategic Advantages in Mobile
T-Mobile (TMUS) is scheduled to report its earnings on Thursday, with a strong track record of beating analyst estimates in 82% of its past reports. The mobile service provider recently received an upgrade to "buy" from "neutral" by Bank of America, with a price target of $220, implying a 17% upside.
Analyst Michael Funk highlighted T-Mobile's strategic advantages, stating, "Our upgrade is based on our view that the market is overreacting to peak concern, T-Mobile having the most strategic partnership value, lowest exposure to low Earth orbit (LEO) broadband and wireless, and the most wireless pricing flexibility." Other financial institutions like Barclays and Morgan Stanley have also lauded T-Mobile, recognizing it as a top pick in the wireless carrier space. According to LSEG, a significant majority of analysts, 26 out of 31, recommend T-Mobile as a buy or strong buy.
