As earnings season accelerates, savvy investors are eyeing companies with a consistent track record of outperforming Wall Street’s expectations. Following strong performances from major banks like Goldman Sachs and Morgan Stanley, the focus shifts to tech giants and consumer favorites scheduled to report next week. This watchlist highlights three companies poised for potential post-earnings rallies based on historical performance data from Bespoke Investment Group.
Chipotle (CMG): Spicing Up Expectations with Consistent Beats
Chipotle has consistently delivered strong earnings, beating consensus estimates about 80% of the time, with an average earnings day rally of 1.8%. As we approach its next report after market close on Wednesday, UBS has expressed optimism, viewing Chipotle as “well-positioned” to maintain sales momentum through challenging economic conditions. Citing strong brand affinity and value, UBS maintains a buy rating with a 12-month price target of $70, signaling a 31% upside potential from the current levels. Despite recent social media backlash over portion sizes and a recent 8% dip over three months, Chipotle reached a 52-week high of $68.55 on June 18, underscoring its resilience and growth potential in 2024.
ServiceNow (NOW): A Workflow Automation Leader with Solid Earnings Momentum
ServiceNow, another standout performer, boasts a 90% beat rate on earnings, typically seeing a 3.1% rise in stock price on earnings day. Although BofA anticipates the upcoming second-quarter results may not significantly shift market sentiment, they still recommend ServiceNow as a top pick with a buy rating and a $900 target price, which would represent nearly 22% growth from its current position. Analyst Brad Sills highlights ServiceNow’s role as a leader in cloud-based workflow automation, tapping into a vast market opportunity in IT and custom applications worth approximately $64.7 billion. Despite its premium valuation at about 55 times forward earnings, the stock’s price is considered reasonable given its market-leading capabilities and growth trajectory.
Deckers Outdoor (DECK): A Fashionable Pick with Strong Brand Appeal
Deckers Outdoor, known for its popular Hoka and Ugg brands, has an impressive track record of exceeding earnings expectations 94% of the time, usually enjoying a 1.7% uptick on earnings day. Despite the stock’s 33% climb this year, it has retracted over 19% since reaching an all-time high of $1,106.89 in early June. Wedbush Securities sees this pullback as an opportunity, maintaining an outperform rating and setting a 12-month price target of $1,030—a potential 16% increase. While first-quarter results typically don’t dramatically affect the stock, Deckers’ consistent performance as a “beat-and-raise” company positions it well for the next earnings announcement.
These are three companies that not only have a strong history of beating earnings but also offer significant upside potential according to leading analysts. These stocks, with their robust historical performance and positive analyst outlooks, present intriguing opportunities for investors looking to capitalize on earnings season volatility.
