Concerns over the Federal Reserve's efforts to control surging inflation by raising interest rates, the continuing Ukraine-Russia war, exacerbated supply chain disruptions, and high oil prices, have driven a massive market sell-off of late. Furthermore, these factors have been increasing the odds of the economy slipping into recession this year. The 10-year Treasury yield has risen to its highest level since November 2018.
According to the U.S. BEA, GDP contracted at an annualized pace of 1.4% in the first quarter. However, first-quarter corporate earnings have been good so far. Many companies have reported robust financial performance, surpassing earnings estimates. According to FactSet, among the 55% of S&P 500 companies that reported first-quarter results as of April 29, 80% have exceeded the Street’s EPS projections, which is higher than the 77% five-year average.
Nutrien Ltd. (NTR), Merck & Co., Inc. (MRK), and Bunge Limited (BG) have reported impressive quarterly results, beating earnings estimates. Therefore, we think these stocks could be ideal bets now.
Nutrien Ltd. (NTR)
Headquartered in Saskatoon, Canada, NTR provides crop inputs and services. It offers potash, nitrogen, phosphate, and sulfate products, and financial solutions. The company also distributes crop nutrients, crop protection products, seeds, and merchandise products.
For the first quarter, ending March 31, 2022, NTR's sales increased 64% year-over-year to $7.66 billion. The adjusted EBITDA grew 224% from its year-ago value to $2.62 billion, while its net earnings improved 941% from its prior-year quarter to $1.39 billion. The company's adjusted EPS rose 831% year-over-year to $2.70, beating the consensus estimate of $2.59.
The $5.70 consensus EPS estimate represents a 174% improvement year-over-year for the second quarter, ending June 30, 2022. Analysts expect NTR's revenue to increase 53.5% year-over-year to $14.65 billion for the same period. The stock has gained 23.5% in price year-to-date and 54% over the past nine months.
NTR's POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock also has a B grade for Growth, Sentiment, and Quality. Within the Agriculture industry, it is ranked #3 of 32 stocks. To see additional POWR Ratings for Value, Stability, and Momentum for NTR, click here.
Merck & Co., Inc. (MRK)
MRK in Kenilworth, N.J., functions as a healthcare company internationally. It has two operational segments, the Pharmaceutical segment, which offers human health pharmaceutical products in the areas of oncology, acute hospital care, immunology, neuroscience, virology, cardiovascular, and diabetes, as well as vaccine products; and the Animal Health segment, which discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, and health management solutions and services.
MRK's sales increased 50% year-over-year to $15.90 billion during the first quarter of its fiscal year 2022. Its non-GAAP net income grew 84% from its year-ago value to $5.43 billion, while its adjusted EPS came in at $2.14, surpassing the consensus estimate by 17.1%.
Analysts expect MRK's revenue to increase 19.7% year-over-year to $13.65 billion for the second quarter, ending June 30, 2022. The $1.71 consensus EPS estimate for the second quarter, ended June 30, 2022, represents a 30.4% improvement year-over-year. Furthermore, the company has an impressive earnings history; it surpassed the consensus EPS estimate in three of the trailing four quarters.
The company's shares have surged 14.4% in price year-to-date and 16.4% over the past nine months.
MRK's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has a B grade for Stability, Sentiment, and Quality. In the Medical – Pharmaceuticals industry, it is ranked #1 of 164 stocks.
In total, we rate MRK on eight distinct levels. Beyond what we have stated above, we have also given MRK grades for Growth, Value, and Momentum. Get all the MRK ratings here.
Click here to checkout our Healthcare Sector Report for 2022
Bunge Limited (BG)
Headquartered in St. Louis, Miss., BG operates as an agribusiness and food company worldwide. It has four operating segments: Agribusiness; Refined; Specialty Oils Milling; and Sugar and Bioenergy.
Last month, BG and CoverCress Inc. (CCI) announced a unique commercial partnership to bring a new renewable oilseed and animal feed crop to market. The agreement builds on a long-term commercial relationship between the two companies and supports the expansion of CCI's CoverCresstechnology, a new winter oilseed crop ideal as a lower carbon intensity feedstock to help cater to the growing requirement for renewable fuels.
In the first quarter, ending March 31, 2022, BG's net sales increased 22.5% year-over-year to $15.88 billion. The total segment EBIT amounted to $893.00 million, while the net income attributable to BG amounted to $688 million. The company's adjusted EPS grew 36.1% from its year-ago value to $4.26, beating Wall Street’s estimate by 44.8%.
The $3.14 consensus EPS estimate for the second quarter, ending June 30, 2022, represents a 20.2% improvement year-over-year. Analysts expect BG's revenue to increase 20.7% year-over-year to $18.57 billion for the second quarter ending June 30, 2022. Furthermore, the company has an impressive earnings history; it surpassed the consensus EPS estimate in each of the trailing four quarters. The stock has soared 15.5% in price year-to-date and 39.4% over the past nine months.
BG's strong fundamentals are reflected in its POWR Ratings. It also has a B grade for Growth and Sentiment. Within the Agriculture industry, it is ranked #10.
Click here to see the additional POWR Ratings for BG (Momentum, Value, Quality, and Stability).
NTR shares were trading at $94.95 per share on Tuesday afternoon, up $2.08 (+2.24%). Year-to-date, NTR has gained 26.86%, versus a -15.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
3 Stocks to Buy After Handily Beating Earnings Estimates StockNews.com
