MW 15 stocks - including Palantir and Nvidia - whose sales estimates have risen the most this earnings season
By Philip van Doorn
Other companies whose consensus 2025 revenue estimates have increased the most include BlackRock and Coterra Energy
At this point in such a good two-year run for the stock market, the warnings continue to flow about the danger of paying too much for stocks. Then again, you could have said that about the S&P 500 and its new top component Nvidia Corp. at any time during this bull market and been left behind as stocks kept rising.
Many warnings are based on price-to-earnings valuations. The SPDR S&P 500 ETF Trust SPY tracks the S&P 500 SPX and trades at a forward P/E ratio of 27.1, based on consensus earnings-per-share estimates over the next 12 months among analysts polled by FactSet. This compares with a five-year average forward P/E of 22.7 and a 10-year average of 20.6.
In late October, BlackRock Chief Executive Larry Fink said that, although P/E ratios were at "extreme" levels, good things were happening that could support the valuations. "We're seeing earnings catch up to the P/Es," he said at the annual Future Investment Initiative Institute, run by Saudi Arabia's sovereign wealth fund. Fink also said that $9 trillion in cash parked in money-market funds could help lead to "an investment blossoming."
Based on Fink's comments, we listed 17 stocks whose P/E ratios had declined over the previous six months, even though the share prices had risen. This was a select list of companies also expected to increase sales and earnings per share (EPS) more rapidly than the full S&P 500 over the next two years.
Fink's comments were made when third-quarter earnings season was in full swing. Now that earnings season is nearly over, we have screened the S&P 500 for companies whose consensus revenue estimates for 2025 have increased the most, following the flurry of financial reports.
Screening the S&P 500 for revenue estimate increases
Although this is an earnings-seasons screen, we are looking at increases in consensus sales estimates, rather than EPS, because percentage changes in EPS would mean nothing if the previous estimate was for a net loss or for a minimal profit. And earnings for any one year might be distorted by one-time items or accounting adjustments.
The consensus estimates are for calendar 2025, as adjusted by FactSet. About 20% of companies in the S&P 500 have fiscal years that don't match the calendar.
Starting with the S&P 500, and narrowing the list to companies covered by at least 10 analysts polled by FactSet, these 15 companies have had the largest increases in consensus revenue estimates for 2025, since Sept. 30:
Company Ticker Est. 2025 sales ($mil) Est. 2025 sales as of Sept. 30 ($mil) Sales est. change Est. 2025 EPS Est. 2025 sales as of Sept. 30 EPS est. change Coterra Energy Inc. CTRA $7,154 $6,438 11.1% $2.77 $2.55 8.3% EPAM Systems Inc. EPAM $5,204 $4,816 8.0% $11.29 $10.98 2.9% Expeditors International of Washington Inc. EXPD $10,588 $9,909 6.9% $5.45 $5.32 2.3% ONEOK Inc. OKE $25,920 $24,339 6.5% $5.90 $6.00 -1.6% Prudential Financial Inc. PRU $60,566 $57,011 6.2% $14.69 $14.62 0.5% BlackRock Inc. BLK $23,668 $22,404 5.6% $48.82 $46.45 5.1% Palantir Technologies Inc. PLTR $3,502 $3,318 5.6% $0.46 $0.42 9.8% Atmos Energy Corp. ATO $4,880 $4,658 4.8% $7.27 $7.22 0.6% Quest Diagnostics Inc. DGX $10,688 $10,225 4.5% $9.72 $9.63 0.9% Marsh & McLennan Cos. Inc. MMC $26,649 $25,685 3.8% $9.47 $9.54 -0.7% Centene Corp. CNC $166,793 $161,093 3.5% $7.12 $7.37 -3.4% Nvidia Corp. NVDA $182,042 $175,850 3.5% $4.09 $3.94 3.9% Roper Technologies Inc. ROP $7,674 $7,421 3.4% $19.98 $19.87 0.6% Amphenol Corp. Class A APH $17,244 $16,676 3.4% $2.16 $2.06 4.6% Fox Corp. Class A FOXA $15,328 $14,836 3.3% $3.93 $3.65 7.4% Source: FactSet
Coterra Energy (CTRA) tops the list with an 11.1% increase in its consensus 2025 revenue estimate since Sept. 30, in part because the company announced two deals to acquire assets in the Permian Basin on Nov. 13.
The consensus calendar 2025 revenue estimate for Palantir Technologies has increased 5.6% since Sept. 30, while its EPS estimate has increased 9.8% - the highest such increase on the list.
For Nvidia $(NVDA)$, the consensus sales estimate for 2025 increased 3.5%, while the EPS estimate increased 3.9%. Nvidia has been exhibiting a "beat-and-raise" pattern for sales and EPS while reporting its results over the past six quarters, with analysts following the reports of rapid increases by raising their estimates. The numbers on this table for Nvidia might seem small, but it has been less than a week since the company presented its latest results.
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Leaving the 15 companies in the same order, here is a summary of analysts' opinions about the stocks:
Company Ticker Share "buy" ratings Share neutral ratings Share "sell" ratings Closing price Cons. price target Implied 12-month upside potential Coterra Energy Inc. CTRA 86% 14% 0% $27.63 $32.64 18% EPAM Systems Inc. EPAM 54% 42% 4% $245.27 $259.22 6% Expeditors International of Washington Inc. EXPD 0% 59% 41% $121.32 $117.36 -3% ONEOK Inc. OKE 40% 60% 0% $117.05 $107.14 -8% Prudential Financial Inc. PRU 18% 70% 12% $127.89 $130.92 2% BlackRock Inc. BLK 80% 20% 0% $1,036.46 $1,100.25 6% Palantir Technologies Inc. PLTR 15% 50% 35% $64.35 $39.69 -38% Atmos Energy Corp. ATO 36% 50% 14% $150.05 $149.28 -1% Quest Diagnostics Incorporated DGX 50% 50% 0% $163.59 $170.27 4% Marsh & McLennan Cos. Inc. MMC 23% 63% 14% $227.82 $235.06 3% Centene Corp. CNC 52% 48% 0% $60.37 $81.25 35% Nvidia Corp. NVDA 91% 9% 0% $141.95 $169.16 19% Roper Technologies Inc. ROP 53% 42% 5% $560.14 $615.50 10% Amphenol Corp. Class A APH 50% 50% 0% $74.29 $77.63 4%
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November 25, 2024 10:44 ET (15:44 GMT)
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