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Earnings season is in full swing. Several large and mega-cap companies have released quarterly earnings, with some solid winners, and others failing short of analyst expectations. While earnings may not be the end-all for financial measures, it is still the most followed metric for any company. Earnings tell us about the company's ability to generate profits and understand the company's value. It is one of the most impacting measures of the company's price, which makes it subject to manipulation from greedy companies.
Earnings results are one of the most followed measures by analysts. Companies that beat analysts' expectations garner market favorability due to the implication of how strong the company’s ability to generate earnings from its operations. In this article, we will look at some of the strong performers in the early part of the current earnings season that we think are worth checking out.
Lamb Weston Holdings, Inc. (LW)
Lamb Weston Holdings, Inc. supplies vegetables, appetizers, frozen potato, and sweet potato products to retailers and restaurants worldwide. Its operations can be categorized into four main segments: Foodservice for its U.S., Canadian, and non-North-American commercial distribution of frozen potato products; Global for distributions on North American-based restaurant chains and global customers; Retail for its grocery and mass merchant clients; and Other for its vegetable and dairy businesses.
LW recently released its earnings with powerful results for its latest quarter. Its reported EPS beat estimates by 49.54%! Not only that, income from operations grew by 106%, QoQ. This prompted LW further to increase its outlook for the fiscal year higher. The company has also completed the acquisition of its remaining interest in its European joint venture Lamb-Weston/Meijer and turned it into a wholly-owned subsidiary. This
acquisition further cements LW’s worldwide footprint and helps it scale up its operations and increase its sales and future earnings.
Analyst Ratings
Analysts rate LW as a “Strong Buy” based on 6 Strong buys and 1 Hold recommendation. The mean target for LW is $125.57, and the high target is $130.00, an upside of 48.59%. Its strong performance gained the following of another analyst and had their recommendation raised compared to how the company was two months ago.
The Progressive Corporation (PGR)
The Progressive Corporation is an insurance holding company specializing in Property, Commercial, and Personal lines of insurance. It is one of the largest and most popular insurance companies in the U.S. and the country's number one RV and motorcycle insurance company. Its operations cover auto and recreational vehicle insurance, physical and business-related insurance, and residential and property insurance. The company also has non-insurance subsidiaries that help support its investment operations, like in its Property segment.
PGR was able to come back from its losses from its previous quarter by beating analyst estimates with an EPS surprise of 22.22%. The company also grew its net quarterly income by 224.64% and its net written premium by 20%. The company has also increased its combined ratio to 97.2%, which says a lot about its financial health. With the company’s adaptability to a challenging economic environment, PGR has made it a very attractive investment for investors looking for potential growth.
Analyst Rating
PGR is rated as a “Moderate Buy” by analysts based on 7 Strong buys, 1 Moderate buy, 6 Holds, 1 Moderate sell, and 1 Strong sell. The mean target for PGR is $158.08, and the high target is $197.00, an upside of 24.84%. PGR also received an upgrade on its rating as one of the analysts has increased its outlook on the company into a Strong buy, making it a total of 7 Strong Buy recommendations from six similar pieces of advice from a month ago.
Domino’s Pizza, Inc. (DPZ)
Domino’s Pizza, Inc. is one of the world's largest pizza brands and a world leader in pizza delivery. Its operations are concentrated in three segments: U.S. stores for its U.S. domestic stores and franchises; International Franchise for its network of around 90 international markets; Supply Chain for its supply chain centers and dough manufacturing; this is also the segment in charge of its vegetable processing and managing other non-U.S. based supply chain centers.
The company bounced back with its quarterly earnings with an outstanding 27.05% earnings beat. The company also grew its quarterly net income by 35.02%. The company, however, experienced a decline in revenue by 3.9%, attributed to the decrease in the order volumes and the company's market basket pricing to its stores. The company recently announced its new Executive Vice President, Sam Jackson, effective November 4, 2023. Jackson’s extensive experience will be an excellent asset to the company and its plans for future growth.
Analyst Ratings
DPZ is rated as a “Moderate buy” based on 13 Strong buys, 2 Moderate buys, 7 Holds, and 2 Strong sells from analysts' recommendations. The mean target for DPZ is $407.83, with a high target of $483.00, an upside of 40.28%.
Final Thoughts
Earnings releases have always influenced investors' and analysts' perceptions of a company’s potential performance. The more predictable the earnings, the more apparent it is for analysts to project the company's financial future. However, it is still important to always conduct due diligence to ensure you understand the business and know where the company’s earnings are derived from to make informed decisions.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
