The stock market always has been about supply and demand, and the key metric that tends to drive stock prices higher is earnings. Without higher earnings, it is very difficult, without the tailwind of a bull market, for stocks to maintain higher valuations. With a near bear market still in the rearview mirror of investors, it makes sense to look for companies hitting the earnings mark on all metrics.
In a new research piece, Jefferies posted a research note from Bespoke that tracked earnings per share winners for the fourth quarter. While the main emphasis was on the one-day performance after posting solid numbers, we were equally intrigued by the companies that beat earnings and revenue estimates, as well as raised forward guidance.
These five companies hit all three, which bodes well for their performance in 2019. We screened our 24/7 Wall St. research database for firms on Wall Street that have those five stocks rated Buy.
This company has their major hub in Dallas, where business continues to boom. American Airlines Group Inc. (NASDAQ: AAL) is the holding company for American Airlines.
Together with wholly owned and third-party regional carriers operating as American Eagle and US Airways Express, the airlines operate an average of nearly 6,700 flights per day to 350 destinations in over 50 countries from its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C.
Investors receive a 1.10% dividend. Merrill Lynch rates the stock a Buy with a $42 price target, but the Wall Street consensus target is higher at $45.29. The shares closed Tuesday at $36.29.
New Oriental Education & Technology
This company is way under the radar, but it had an earnings bonanza for shareholders. New Oriental Education & Technology Group Inc. (NYSE: EDU) is the largest private education service provider in China, with exposure to overseas test preparation, domestic test preparation, K-12 tutoring, language training, online education and more.
Founded in 1993, New Oriental had around 6.3 million enrollments in fiscal year 2018. As of May 2018, the company had a network of 1,081 learning centers and schools. The company went public in 2006.
Merrill Lynch has a Buy rating and an $80 price target, while the consensus target is $82.01. Shares closed on Tuesday at $75.09.
This is the go-to financial institution for college loans. SLM Corp.’s (NYSE: SLM) primary business is to originate and service loans it makes to students and their families to finance the cost of their education. The company calls itself a saving, planning and paying for college company.
SLM is engaged in originating and servicing private education loans that are not made, insured or guaranteed by any state or federal government. The company also operates Upromise, a consumer savings network that provides financial rewards on everyday purchases to help families save for college.
SLM is the largest private student lender in the United States. In this capacity, it controls nearly 50% of its primary market, and the student lending market is a secular (rather than cyclical) market as the demand for secondary (and graduate education) is persistent in any economic environment (and may increase in downturns).
Shareholders receive a 1.12% dividend. The Jefferies Buy rating comes with a $16 price target. The consensus target is $13.89, and shares closed on Tuesday at $10.76.
This top consumer apparel company posted outstanding results. V.F. Corp. (NYSE: VFC) is a leading apparel wholesaler of lifestyle brands, including North Face, Vans, Wrangler, Lee, Timberland and Nautica. VFC distributes products globally via department stores, independent retailers, specialty chains and its own retail (full price, outlet and e-commerce).
Coalition segments include Outdoor and Action Sports (60% of 2015 revenue), Jeanswear (23% of revenue), Imagewear (9% of revenue), Sportswear (5% of revenue) and Contemporary (3% of revenue).
The company’s fiscal third-quarter EPS beat on better than expected revenues was driven by strong growth in Vans. VFC raised its fiscal 2019 revenue and EPS guidance on ongoing momentum in Vans and improving The North Face trends.
Shareholders receive a 2.43% dividend. The Merrill Lynch price objective for the Buy-rated stock is $105, and the consensus target price is $94.10. Shares closed Tuesday at $84.08.
This top chip company blew away earnings estimates and the shares soared higher. Xilinx Inc. (NASDAQ: XLNX) is a leading fabless supplier of high-density programmable logic devices, which are standard integrated circuits that offer significant advantages over custom logic chips, such as application-specific integrated circuits. They are used extensively in key end markets such as communications.
Merrill Lynch has liked this company for some time and noted this after the outstanding results:
Solid beat raise/results on broad-based strength. We raise estimates, reiterate Buy and take price objective higher. Secular exposure to the most attractive markets in semis (data ctr, 5G, autonomous) helps shield Xilinx from macro turbulence. We view the report as positive read across for other 5G-exposed peers.
Merrill Lynch raised its price target to $120 from $110. The consensus target is $102.48, and shares ended Tuesday at $109.39.
These five top companies across a wide swath of sectors all beat earnings and revenue estimates and raised forward guidance. In a market that seems a little wobbly, these are good bets for growth investors with some risk tolerance looking to stay in the game, but who want to be cautious.