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5 Top Mid-Cap Stocks Set to Gain on Earnings Next Week

Nalak Das
·6 min read

Wall Street had a dream run in 2019 wherein all three major stock indexes, predominantly comprising large-cap stocks, witnessed best yearly performances in six years. Aside from these three large-cap centric indexes, the S&P 400 Mid Cap Index (SP400) also rallied 24.2% in 2019 and 2.6% in fourth-quarter 2019. In fact, investment in mid-cap stocks is recognized as a good portfolio diversification strategy. These stocks combine attractive attributes of both small and large-cap stocks.

Notably, the fourth-quarter earnings trends are showing steady improvement. Although corporate earnings growth was negative year over year in the first three quarters of last year, fourth-quarter results are faring better than initially anticipated. Below we will discuss how the reporting cycle is faring and present five top-ranked mid-cap stocks that are poised to beat earnings estimates next week.

Fourth-Quarter Earnings Results Improving  

Fourth-quarter 2019 earnings results are improving gradually. However, overall earnings are still expected to decline. As of Feb 5, 266 S&P 500 members reported fourth-quarter earnings results. Total earnings of these companies are up 0.4% from the same period last year on 3% higher revenues. Of the total, 70.7% surpassed EPS estimates while 67.3% outpaced revenue estimates.

Overall, fourth-quarter 2019 earnings for the S&P 500 Index were projected to be down 0.2% year over year on 4.2% higher revenues. This suggests a significant improvement from earnings decline of 3.2% year over year on 3.5% higher revenues, projected at the beginning of the reporting cycle. (Read More: Q4 Earnings Season Scorecard)

Fourth-Quarter at a Glance

The final three months of last year were quite promising as the U.S.-China trade war finally showed signs of shimmering down and strong economic data boosted investors’ sentiments. Moreover, Fed’s timely intervention and accommodative monetary policy helped the economy, especially the sagging U.S. housing market to recover with a low mortgage rate.

The U.S. economy is on a stable footing. In the fourth quarter, the GDP grew at 2.1% while for 2019, the economy increased 2.3%. Strong consumer spending (constituting 70% of GDP), a robust labor market with a historically low-level of unemployment, steady growth in wage rate and a housing-market revival bolstered investors’ sentiments are likely to get reflected in earnings results.

5 Mid-Cap Stocks Poised to Beat Earnings Estimates

We have narrowed down our search to five mid-cap companies that are gearing up to release their earnings results next 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 expected to soar after earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The chart below shows price performance of our five picks in the past three months.

Denny's Corp. DENN is one of the largest restaurant companies worldwide, operating moderately-priced restaurants: Denny's, Hardee's, Quincy's, El Pollo Loco, Coco's and Carrows. The company has an Earnings ESP of +5% for fourth-quarter 2019.

Denny's has an expected earnings growth rate of 14.9% for the current year. The Zacks Consensus Estimate for the current year has improved 1.3% over the last 30 days. The trailing four-quarter positive earnings surprise is 19.5%, on average. Denny's is set to release earnings results on Feb 11, after the closing bell.

Bunge Ltd. BG operates as an agribusiness and food company globally. It operates in five segments: Agribusiness, Edible Oil Products, Milling Products, Sugar and Bioenergy and Fertilizer. The company has an Earnings ESP of +18.18% for fourth-quarter 2019.

Bunge has an expected earnings growth rate of 30.7% for the current year. The Zacks Consensus Estimate for the current year has improved 1.7% over the last 30 days. The trailing four-quarter positive earnings surprise is 394.6%, on average. Bunge is set to release earnings results on Feb 12, before the opening bell.

YETI Holdings Inc. YETI designs, markets, retails, and distributes products for the outdoor and recreation market under the YETI brand in the United States, Canada, Australia and Japan. The company has an Earnings ESP of +4.65% for fourth-quarter 2019.

YETI Holdings has an expected earnings growth rate of 20.6% for the current year. The Zacks Consensus Estimate for the current year has improved 2.2% over the last 30 days. The trailing four-quarter positive earnings surprise is 51.8%, on average. YETI Holdings is set to release earnings results on Feb 13, before the opening bell.

Tempur Sealy International Inc. TPX develops, manufactures, markets, and distributes bedding products. It operates through two segments, North America and International. The company has an Earnings ESP of +0.94% for fourth-quarter 2019.

Tempur Sealy has an expected earnings growth rate of 46.8% for the current year. The Zacks Consensus Estimate for the current year has improved 0.7% over the last 30 days. The trailing four-quarter positive earnings surprise is 10%, on average. Tempur Sealy is set to release earnings results on Feb 13, before the opening bell.

Alteryx Inc. AYX operates a self-service data analytics software platform that enables organizations to enhance business outcomes and productivity of their business analysts, data scientists and citizen data scientists worldwide. The company has an Earnings ESP of +6.49% for fourth-quarter 2019.

Alteryx has an expected earnings growth rate of 39.1% for the current year. The trailing four-quarter positive earnings surprise is 129.2%, on average. Alteryx is set to release earnings results on Feb 13, after the closing bell.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.7% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Tempur Sealy International, Inc. (TPX) : Free Stock Analysis Report
 
Denny's Corporation (DENN) : Free Stock Analysis Report
 
Bunge Limited (BG) : Free Stock Analysis Report
 
Alteryx, Inc. (AYX) : Free Stock Analysis Report
 
YETI Holdings, Inc. (YETI) : Free Stock Analysis Report
 
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