MW Micron, GM join Big Tech on this list of 20 biggest winners this earnings season
By Philip van Doorn
Companies in the S&P 500 increasing sales by double digits while improving profit margins also include Netflix, two home builders and American Express
Now that two-thirds of the S&P 500 have announced their quarterly financial results, it is a good time to consider which companies have fared best.
You will see headlines in the financial media about companies "beating" or "missing" consensus estimates for profits for revenue, but if the bar has been set low, or a company has lost less money than expected, beating an estimate may not mean much.
Of course, it is best to see companies beating the estimates repeatedly, because doing so can set up a "beat and raise" pattern, with estimates continually rising as the years go by. That can support rising share prices.
But investors might find it useful to look at companies' profit margins. These can shed light on how well a company is maintaining pricing power for its products or services and whether or not a drag has been placed on its efficiency.
Screening for earnings-season winners
Through Wednesday, 334 companies listed on the S&P 500 SPX had reported results for fiscal quarters ending Feb. 18 or later. About 20% of the S&P 500 have fiscal calendars that don't match the quarter.
We screened these 334 companies in the S&P 500 for the following:
Quarterly sales per share that were up from a year earlier. We looked at the per-share figures, rather than raw revenue, because this would reflect dilution to shareholders if a company issued stock to fund a large acquisition. Sales per share would also rise if a company lowered its share count by repurchasing stock. Improved gross profit margins. A company's gross margin is its net sales, less the cost of goods or services sold, divided by sales. Net sales are sales minus returns and discounts, such as coupons. The cost of goods or services sold includes the actual costs of making the items or providing the services. Gross margin is a useful measurement of pricing power, and a combination of an expanding gross margin and increasing sales is a good sign.Improved operating margins. A company's net operating margin goes further, subtracting more overhead and other expenses that aren't directly related to the production of goods and services. It is, essentially, earnings before interest and taxes, divided by sales.
Profit margins vary widely by industry. They might be most useful when looking at their movement for individual companies, or when comparing similar companies.
We didn't look at earnings per share in the screen because one-time events or accounting adjustments can distort the bottom line.
Among these 334 companies, data for gross and operating margins were available from FactSet for the most recent and year-earlier quarters for 279 companies.
The margins aren't available for most companies in the financial sector, because the banking and insurance industries use different measures of profitability. And for a few companies, FactSet will be unable to provide operating margins until more detailed 10-Q reports are filed with the Securities and Exchange Commission.
Here are the 20 companies of the 279 we were able to screen in the S&P 500 showing the largest increases in sales while also improving gross and operating margins from a year earlier:
Company Ticker Change in quarterly sales per share from a year earlier Gross Margin Gross margin, year-earlier quarter Operating Margin Operating margin, year-earlier quarter Micron Technology Inc. MU 54% 18.53% -32.66% 32.47% -7.66% First Solar Inc. FSLR 44% 43.43% 19.92% 43.19% 18.89% Las Vegas Sands Corp. LVS 42% 39.27% 35.47% 36.67% 31.51% Hess Corp. HES 35% 48.96% 35.17% 62.04% 50.96% General Motors Co. GM 30% 13.74% 12.82% 15.19% 13.48% Eli Lilly and Co. LLY 26% 80.91% 76.63% 34.44% 28.18% Meta Platforms Inc. Class A META 26% 81.84% 78.29% 47.83% 38.03% NextEra Energy Inc. NEE 23% 43.11% 27.47% 50.85% 35.87% ServiceNow Inc. NOW 22% 80.02% 79.10% 17.75% 11.69% Carnival Corp. CCL 22% 20.13% 12.16% 16.43% 10.02% Garmin Ltd. GRMN 20% 58.06% 56.89% 24.84% 20.95% D.R. Horton Inc. DHI 18% 25.62% 24.79% 16.59% 15.86% Alphabet Inc. Class A GOOGL 18% 58.49% 56.74% 37.51% 32.30% Norwegian Cruise Line Holdings Ltd. NCLH 18% 26.51% 19.87% 21.15% 12.84% Netflix Inc. NFLX 18% 46.95% 41.14% 68.24% 64.51% Royal Caribbean Group RCL 17% 34.74% 25.67% 30.61% 22.01% Western Digital Corp. WDC 17% 28.96% 13.02% 12.84% -4.99% Microsoft Corp. MSFT 17% 70.08% 69.49% 54.33% 49.00% PulteGroup Inc. PHM 17% 29.60% 28.85% 21.08% 19.98% American Express Co. AXP 17% 62.03% 60.92% 30.22% 25.84% Source: FactSet
Click the tickers for more about each company.
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-Philip van Doorn
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May 02, 2024 10:52 ET (14:52 GMT)
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