Lilly, Uber among the biggest recent winners of the beat-and-raise game in the stock market
By Philip van Doorn
These companies 'surprised' analysts with their results and have seen their 2025 earnings estimates rise the most
For U.S. stocks, quarterly earnings seasons are set up to follow an old "beat-and-raise" pattern, which can lift share prices. A look ahead at earnings estimates for 2025 highlights a group of companies whose earnings estimates have been raised the most.
Here's the pattern: During each quarterly earnings season, most companies in the S&P 500 will report profits that exceed consensus earnings estimates among analysts working for brokerage firms. Following these "surprises," the analysts will raise their earnings estimates for coming quarters and even for the next few years.
A commonly used valuation metric for stocks used by investors is the forward price-to-earnings ratio, which is the current share price divided by the consensus earnings-per-share estimate for the following 12 months. So if you raise the denominator, the beat-and-raise pattern might make for a somewhat orderly upward path.
This earnings season the action has been following the usual pattern. Before setting out the numbers, we have to point out that about 20% of companies in the S&P 500 SPX have fiscal years that don't match the calendar. This means there is no neat and orderly period for quarterly earnings reports - the flow never really ends.
Through Monday, 454 companies in the S&P 500 had reported financial results for fiscal quarters ended May 25 or later. One that hasn't yet reported is Nvidia Corp. (NVDA), which is scheduled to announce results on Aug. 28 for its fiscal quarter ending July 31.
The Ratings Game: Nvidia is one of BofA's top 'rebound' stock picks. Here are the others.
Here is how we screened companies based on the beat-and-raise pattern, although we looked a bit further out to earnings estimates for calendar 2025.
Among the 454 companies in the S&P 500 that had reported quarterly results through Monday, consensus estimates were available from FactSet for 453 of them before the earnings announcements were made.Among those 453 companies, 447 reported profits, adjusted or otherwise. FactSet uses the companies' adjusted earnings-per-share numbers that eliminate one-time items, to calculate earnings surprises. Among those 447 companies, 344 reported EPS at least a penny higher than the consensus estimates. That made for a typical "beat rate" of 77%.Among the 344 "earnings beaters," 221 also reported quarterly revenue that was higher than what analysts expected.
We decided to look out to the 2025 estimates, as adjusted by FactSet for companies whose fiscal years don't match the calendar. On our "surprise" list of 221 companies, these 10 have had their consensus calendar 2025 EPS estimates increased by the highest percentages since June 30:
Company Ticker Increase in consensus 2025 EPS estimate since June 30 Increase in consensus 2025 revenue estimate since June 30 Quarterly EPS 'beat' Quarterly revenue 'beat'
Universal Health Services Inc. Class B UHS 15.0% 0.7% 30.5% 1.1%
Seagate Technology Holdings PLC STX 14.6% 2.1% 37.8% 0.9%
Eli Lilly and Co. LLY 14.1% 6.0% 42.9% 13.2%
Fortinet Inc. FTNT 13.8% 0.3% 39.3% 2.1%
Western Digital Corp. WDC 12.1% 0.3% 22.0% 0.5%
Newmont Corp. NEM 9.7% 3.4% 16.8% 6.5%
Howmet Aerospace Inc. HWM 8.3% 1.8% 11.5% 2.5%
Packaging Corp. of America PKG 7.8% 3.1% 3.4% 2.5%
HCA Healthcare Inc. HCA 6.0% 1.4% 11.5% 2.6%
Uber Technologies Inc. UBER 5.7% 0.4% 50.4% 1.2%
Source: FactSet
Three of the companies on the list above also rank among the 10 companies on the list of 221 whose consensus revenue estimates for calendar 2025 have increased the most since June 30:
Company Ticker Increase in consensus 2025 revenue estimate since June 30 Increase in consensus 2025 EPS estimate since June 30 Quarterly revenue 'beat' Quarterly EPS 'beat'
Devon Energy Corp. DVN 9.9% 4.1% 0.4% 11.6%
KKR & Co. KKR 8.4% 0.1% 3.7% 3.0%
Eli Lilly and Co. LLY 6.0% 14.1% 13.2% 42.9%
Amphenol Corp. Class A APH 5.9% 4.8% 6.5% 7.7%
Monolithic Power Systems Inc. MPWR 4.8% 5.3% 3.4% 3.4%
Quest Diagnostics Inc. DGX 3.9% 1.4% 0.3% 0.7%
Newmont Corp. NEM 3.4% 9.7% 6.5% 16.8%
Valero Energy Corp. VLO 3.3% -2.7% 4.6% 4.4%
Packaging Corp. of America PKG 3.1% 7.8% 2.5% 3.4%
Corning Inc. GLW 2.9% 3.3% 1.5% 1.5%
Source: FactSet
Companies appearing on both lists include Eli Lilly (LLY), Newmont (NEM)and Packaging Corp. of America (PKG).
Click the tickers for more about each company, including corporate profiles, price ratios, financials and charts.
Click here for Tomi Kilgore's detailed guide to the wealth of information available for free on the MarketWatch quote page.
Don't miss: These stocks join Meta and Eli Lilly as the biggest winners this earnings season
-Philip van Doorn
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
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08-13-24 1131ET
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