The third-quarter 2022 earnings season is in full swing as we are in the busiest week of this reporting cycle. This earning season is of immense importance as U.S. corporates are facing severe challenges on the back of record-high inflation, an extremely hawkish Fed and threats of a recession. So far, the earnings results have come in mixed.
We have identified five stocks with a favorable Zacks Rank that are set to beat earnings estimates today after the closing bell. Investment in these stocks should be fruitful as an earnings beat is expected to drive stock prices going forward. These companies are — Chesapeake Energy Corp. CHK, McKesson Corp. MCK, ZoomInfo Technologies Inc. ZI, EnLink Midstream LLC ENLC and Livent Corp. LTHM.
Q3 Earnings Results So Far
Our estimates for third-quarter earnings of the market’s benchmark, the S&P 500 Index, has shown a gradual decline in the past three and a half months. As of Oct 28, 263 companies of the S&P 500 Index have reported results.
Total earnings of these companies are down 0.6% from the same period last year on 11.3% higher revenues, with 71.9% beating EPS estimates and 63.1% beating revenue estimates. Our current estimate has projected that total earnings of the S&P 500 Index are expected to be up 1% year over year on 9.4% higher revenues.
Our Top Picks
Five companies will report earnings results today after the closing bell. Each of these stocks carries a Zacks Rank #2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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 anticipated to appreciate after their earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our five picks in the last quarter.
Image Source: Zacks Investment Research
Chesapeake Energy is an independent exploration and production company, engaged in the acquisition, exploration, and development of properties for the production of oil, natural gas, and natural gas liquids from underground reservoirs in the United States.
CHK holds interests in natural gas resource plays in the Marcellus Shale in the northern Appalachian Basin in Pennsylvania, the Haynesville/Bossier Shales in northwestern Louisiana, and the liquids-rich resource play in the Eagle Ford Shale in South Texas.
CHK has an Earnings ESP of +0.42%. It has an expected earnings growth rate of 31.7% for next year. Chesapeake Energy recorded earnings surprises in three out of the last four reported quarters, with an average beat of 24.5%.
McKesson provides pharmaceuticals and medical supplies in the United States and internationally. The strong fiscal first-quarter show by three of the four segments of MCK is encouraging. A strong earnings outlook for fiscal 2023 instill optimism.
Strong adjusted operating profit growth across the key segments of MCK is encouraging. A strong position in the Distribution market continues to favor the stock. McKesson played a crucial role in the COVID-19 response efforts in the United States and abroad via the distribution of COVID-19 vaccines, ancillary supply kits, and COVID-19 tests.
MCK has an Earnings ESP of +0.27%. It has an expected earnings growth rate of 3% for the current year (ending March 2023). Chesapeake Energy recorded earnings surprises in three out of the last four reported quarters, with an average beat of 13%.
ZoomInfo provides go-to-market intelligence and engagement platform for sales and marketing teams in the United States and internationally. ZI’s cloud-based platform provides information on organizations and professionals to help users identify target customers and decision-makers, obtain continually updated predictive lead and company scoring, monitor buying signals and other attributes of target companies, craft messages, engage through automated sales tools, and track progress through the deal cycle.
ZoomInfo serves enterprises, mid-market companies, and down-to-small businesses that operate in various industry verticals, including software, business services, manufacturing, telecommunications, financial services, media and internet, transportation, education, hospitality, and real estate.
ZI has an Earnings ESP of +1.27%. It has an expected earnings growth rate of 40.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.3% over the last 90 days. ZoomInfo recorded earnings surprises in the last four reported quarters, with an average beat of 20.9%.
Livent is the largest vertically integrated pure-play producer of low-cost lithium. This leading lithium producer is a seller to EV original equipment manufacturers and battery makers worldwide. LTHM is one of the lowest-cost resources for lithium carbonate, providing the company with a competitive edge. Livent has a current production capacity of around 20,000 metric tons of lithium carbonate, which is expected to double by fourth-quarter 2023.
LTHM is currently producing qualified battery-grade lithium hydroxide in the United States and China. Livent remains on track with near-term capacity expansions and a 5,000 metric ton hydroxide addition in Bessemer City. The acquisition of 25% indirect equity ownership in the Québec-based Nemaska Lithium project is also set to aid top-line growth.
LTHM has an Earnings ESP of +7.93%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.1% over the last 30 days. Livent recorded earnings surprises in three out of the last four reported quarters, with an average beat of 15.7%.
EnLink Midstream is an Independent midstream energy company in the United States. ENLC is involved in natural gas gathering, treating, processing, transmission, distribution, supply and marketing, and crude oil marketing. EnLink Midstream operates through Permian, Louisiana, Oklahoma, North Texas, and Corporate segments.
ENLC has an Earnings ESP of +22.03%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the last seven days. EnLink Midstream recorded earnings surprises in three out of the last four reported quarters, with an average beat of 51.7%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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Chesapeake Energy Corporation (CHK): Free Stock Analysis Report
McKesson Corporation (MCK): Free Stock Analysis Report
EnLink Midstream, LLC (ENLC): Free Stock Analysis Report
Livent Corporation (LTHM): Free Stock Analysis Report
ZoomInfo Technologies Inc. (ZI): Free Stock Analysis Report
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