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Deep Dive: 31 stocks have hit a trifecta so far this earnings season

Companies including Tesla, AMD and Pool Corp. have increased sales, improved profit margins and built enough enthusiasm for analysts to have raised their 2022 sales estimates significantly.

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Earnings season is in full swing, and there has been no shortage of big news that can drive stock prices up or down. There have also been many successes that can push shares higher over time.

Zillow Group Inc.
Z
provided an example of a big earnings splash on Nov. 2 after the market close. While announcing its quarterly results, the company said it was exiting its Zillow Offers business.

That was a major change of strategy after the company, whose primary business is listing real estate for sale or rental, began buying and selling homes in 2018. Zillow said it would lay off about 25% of its workforce. The stock was down as much as 19% in morning trading on Nov. 3; it had already fallen 33% in 2021 through Nov. 2.

Below is a list of companies whose financial results have shown significant improvement from a year earlier.

Stock screen for happier earnings-season results

The following screen focuses on sales and margins because of the vagaries of companies’ reported earnings, which are often distorted for a quarter or a year by one-time events.

Through Nov. 2, among the S&P 500
SPX,
289 companies had reported results for fiscal quarters ended Aug. 14 or later.

Among those 289, 31 companies met the following qualifications:

Quarterly sales had risen from the year-earlier quarter.

Gross and operating margins for the quarter were improved from a year earlier. These measures aren’t used for most financial-services companies, so most were excluded from the screen. For some of the other companies, FactSet cannot calculate gross or operating margins (or both) without the set of GAAP data available later, when the 10-Q reports come out (generally within 45 days of the end of the reported fiscal quarter).

Consensus sales estimates for calendar 2022 have increased at least 2% from where they were Sept. 30. We have used calendar years for a uniform set of estimates, even though many companies have fiscal years that don’t match the calendar.

A company’s gross margin is its net revenue minus the cost of goods or services sold. It reflects a company’s pricing power and its direct production costs, including labor and materials. A company’s management team might decide to build market share by increasing discounts to customers or holding the line on price increases. This may be worthwhile depending on the competitive environment, but it cannot go on forever. It’s a good sign if the gross margin is expanding as sales increase.

A company’s operating margin goes further, subtracting more overhead and other expenses that aren’t directly related to the production of goods and services sold. It is, essentially, earnings before interest and taxes (EBIT) divided by sales.

Here are the 31 companies that have hit the trifecta so far this earnings season. There are two tables, sorted by how much quarterly sales increased from a year earlier. The first table includes the screening data and the second table is a summary of opinions among analysts polled by FactSet:

Company

Increase in quarterly sales from year earlier

Gross margin

Gross margin – year-earlier quarter

Operating margin

Operating margin – year-earlier quarter

Increase  in calendar 2022 cons. sales estimate since Sept. 30

United Airlines Holdings Inc.
UAL

211.4%

2.03%

-106.19%

7.25%

-97.23%

2.8%

Delta Air Lines Inc.
DAL

199.0%

11.81%

-65.38%

10.02%

-58.43%

3.2%

American Airlines Group Inc.
AAL

182.7%

11.51%

-80.65%

1.82%

-88.65%

2.5%

Diamondback Energy Inc.
FANG

165.3%

62.98%

30.00%

78.80%

67.08%

9.6%

Nucor Corp.
NUE

109.3%

33.03%

10.23%

30.05%

11.20%

6.4%

Phillips 66
PSX

91.4%

4.36%

0.26%

3.90%

-0.57%

6.4%

LyondellBasell Industries N.V.
LYB

87.3%

20.09%

12.54%

20.15%

13.60%

6.5%

Hilton Worldwide Holdings Inc.
HLT

87.0%

31.80%

11.38%

28.16%

12.45%

2.0%

Valero Energy Corp.
VLO

86.7%

3.02%

-3.26%

4.47%

-0.71%

5.2%

Chevron Corp.
CVX

77.6%

19.14%

7.43%

24.38%

15.26%

3.5%

Hess Corp.
HES

73.1%

27.12%

-12.40%

42.64%

33.37%

6.4%

Celanese Corp.
CE

60.6%

31.33%

23.10%

27.27%

20.62%

7.1%

Tesla Inc.
TSLA

56.8%

26.60%

23.52%

20.47%

15.88%

4.4%

Advanced Micro Devices Inc.
AMD

54.0%

48.37%

43.91%

24.69%

19.35%

4.4%

Dow Inc.
DOW

52.8%

21.03%

12.90%

21.78%

14.54%

2.4%

C.H. Robinson Worldwide Inc.
CHRW

48.3%

7.09%

6.78%

5.32%

4.62%

10.5%

Robert Half International Inc.
RHI

43.9%

41.57%

37.94%

14.16%

7.74%

3.0%

Mosaic Co.
MOS

43.5%

26.05%

14.91%

27.66%

20.16%

17.6%

KLA Corp.
KLAC

35.4%

62.93%

58.76%

46.25%

39.61%

4.7%

NextEra Energy Inc.
NEE

29.3%

48.18%

37.02%

60.20%

53.83%

2.2%

J.B. Hunt Transport Services Inc.
JBHT

27.2%

11.07%

9.70%

13.59%

12.88%

3.3%

Intercontinental Exchange Inc.
ICE

25.4%

69.18%

68.96%

52.66%

49.47%

2.3%

Pool Corp.
POOL

23.9%

31.31%

28.85%

17.24%

13.65%

3.9%

Realty Income Corp.
O

22.5%

38.06%

33.47%

73.65%

71.18%

5.4%

CBRE Group Inc. Class A
CBRE

20.4%

20.84%

16.88%

7.79%

5.08%

2.9%

Teradyne Inc.
TER

16.0%

60.28%

55.60%

37.23%

32.70%

2.0%

Extra Space Storage Inc.
EXR

15.8%

60.77%

56.24%

69.77%

65.37%

3.5%

Equifax Inc.
EFX

14.5%

50.49%

50.02%

32.03%

28.78%

4.2%

Norfolk Southern Corp.
NSC

13.8%

39.66%

33.52%

50.07%

45.21%

2.3%

Genuine Parts Co.
GPC

10.3%

34.00%

33.39%

8.90%

8.75%

2.2%

Cboe Global Markets Inc.
CBOE

3.0%

40.00%

31.85%

29.41%

23.34%

2.6%

Source: FactSet

Click on the tickers for more about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on MarketWatch’s quote page.

Airlines lead the list, which is no surprise, as the group was moving toward normal operations following the incredible disruption from the coronavirus pandemic in 2020. There are also several energy companies on the list that have benefitted from rising demand and supply disruptions during the pandemic recovery. But many other industries are represented.

Leaving the group in the same order, here’s a summary of analysts’ opinions:

Company

Share “buy” ratings

Share neutral ratings

Share “sell” ratings

Closing price – Nov. 2

Cons. price target

Implied 12-month upside potential

United Airlines Holdings Inc.
UAL

41%

41%

18%

$47.98

$59.72

24%

Delta Air Lines Inc.
DAL

57%

43%

0%

$40.39

$54.22

34%

American Airlines Group Inc.
AAL

23%

41%

36%

$19.83

$19.08

-4%

Diamondback Energy Inc.
FANG

88%

12%

0%

$114.45

$129.85

13%

Nucor Corp.
NUE

25%

75%

0%

$107.22

$117.00

9%

Phillips 66
PSX

74%

26%

0%

$77.55

$92.94

20%

LyondellBasell Industries N.V.
LYB

50%

46%

4%

$94.37

$115.46

22%

Hilton Worldwide Holdings Inc.
HLT

48%

47%

5%

$141.34

$149.56

6%

Valero Energy Corp.
VLO

81%

14%

5%

$75.86

$89.88

18%

Chevron Corp.
CVX

59%

41%

0%

$113.83

$126.86

11%

Hess Corp.
HES

63%

37%

0%

$82.30

$104.04

26%

Celanese Corp.
CE

62%

38%

0%

$166.13

$193.82

17%

Tesla Inc.
TSLA

44%

27%

29%

$1,172.00

$810.49

-31%

Advanced Micro Devices Inc.
AMD

55%

43%

2%

$127.63

$134.50

5%

Dow Inc.
DOW

35%

54%

11%

$58.47

$67.77

16%

C.H. Robinson Worldwide Inc.
CHRW

29%

63%

8%

$94.57

$103.44

9%

Robert Half International Inc.
RHI

43%

21%

36%

$114.74

$106.90

-7%

Mosaic Co.
MOS

45%

55%

0%

$37.64

$45.33

20%

KLA Corp.
KLAC

57%

43%

0%

$388.75

$415.33

7%

NextEra Energy Inc.
NEE

68%

27%

5%

$85.42

$90.11

5%

J.B. Hunt Transport Services Inc.
JBHT

42%

50%

8%

$193.19

$194.85

1%

Intercontinental Exchange Inc.
ICE

74%

26%

0%

$138.81

$152.14

10%

Pool Corp.
POOL

50%

50%

0%

$515.41

$562.43

9%

Realty Income Corp.
O

60%

40%

0%

$71.99

$79.25

10%

CBRE Group Inc. Class A
CBRE

44%

45%

11%

$102.12

$123.33

21%

Teradyne Inc.
TER

79%

21%

0%

$139.35

$153.24

10%

Extra Space Storage Inc.
EXR

65%

29%

6%

$202.04

$204.86

1%

Equifax Inc.
EFX

67%

28%

5%

$274.51

$287.76

5%

Norfolk Southern Corp.
NSC

57%

29%

14%

$286.02

$300.08

5%

Genuine Parts Co.
GPC

14%

79%

7%

$133.92

$137.38

3%

Cboe Global Markets Inc.
CBOE

47%

33%

20%

$135.07

$133.00

-2%

Source: FactSet

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