- CNBC crunched the numbers using data from Bespoke Investment Group and found five stocks that nearly always beat Wall Street's earnings forecasts.
- Plus, these companies normally trade positive after their earnings beat.
(This story is part of the Weekend Brief edition of the Evening Brief newsletter. To sign up for CNBC's Evening Brief, click here.)
Of the hundreds of big companies set to report earnings next week, there are five key names that investors should be focused on because they almost always top expectations.
CNBC crunched the numbers using data from Bespoke Investment Group and found five stocks that nearly always beat Wall Street's earnings forecasts. Plus, these companies normally trade positive after their surefire earnings beat.
Outerwear company Columbia Sportswear reports quarterly earnings after the bell on Thursday and if history is any guide, profits will beat estimates. Bespoke data shows that Columbia Sportswear beat's earnings estimates 97% of the time and trades up an average of 0.7% on the day it reports.
Analysts polled by FactSet are expecting Columbia to report earnings per share of $1.64 on revenue of $952 million. In the same period a year prior, Columbia reported earnings of $1.68 on revenue of $899 million.
Citigroup said the estimates for a decline in EPS year-over-year is due to a challenging outerwear environment in the fourth quarter. VF Corp's challenges with North Face and a higher number of markdowns at Lululemon and Macy's worries the firm about Columbia's holiday shopping quarter.
With a market value of about $6.4 billion, shares of Columbia Sportswear have gained 6% in the past 12 months. The S&P 500 has returned more than 20% in the past year.
Of the 12 analysts that cover Columbia Sportswear, 8 recommend buying the stock, according to FactSet. Four analysts have a hold rating.
Agricultural equipment manufacturer AGCO tops Wall Street's earnings forecasts 93% of the time, according to Bespoke. The Georgia-based company trades up slightly on the day it reports, on average. AGCO, which has a market value of about $5.4 billion, reports quarterly earnings after the bell on Wednesday.
Analysts polled by FactSet estimate AGCO will report earnings per share of $1.55 on revenue of $2.666 billion. The company earned $1.31 per share on revenue of $2.592 billion in the fourth quarter a year earlier.
Stephens lowered its earnings estimates for AGCO by 3% due to a weak finish to retail sales in December, but the firm said "AGCO is well positioned in the ag tech competitive landscape with differentiated technology and growth drivers."
"Recent commodity weakness from the corona virus is a wild card, but AGCO could be better insulated than peers given disproportionate exposure to Europe," Stephens analyst Ashish Gupta said in a note to clients.
Shares of AGCO are up about 10% in the past 12 months.
Of the 19 analysts that cover AGCO, only eight have a buy rating, according to FactSet. Eight analysts have a hold rating and three recommend selling the stock.
IT services company Cognizant Tech reports quarterly earnings after the bell on Wednesday. Bespoke data shows the company tops Wall Street earnings estimates 91% of the time, and trades up 1.2% on average after its reports.
Cognizant Tech is expected to report earnings per share of $1.04 on revenue of $4.228 billion, according to analysts polled by FactSet. The company reported earnings per share of $1.13 on revenue of $4.129 billion in the fourth quarter a year earlier.
JPMorgan said Cognizant Tech's earnings will likely be hurt by weakness in its banking customers, specifically the large European banks, and healthcare customers.
"We're optimistic the new CEO's stated actions should yield improved results, but patience is required, recognizing risks in turning around a people based business," JPMorgan analyst Tien-tsin Huang said in a note to clients.
Shares of Cognizant Tech are down more than 11% in the past 12 months. The company has a market value of $34.2 billion.
Of the 32 analysts that cover Cognizant Tech, only nine recommend buying the stock, according to FactSet. Sixteen, or half, have a hold rating and seven have a sell rating.
Paycom Software reports earnings after the bell on Wednesday and if history is any guide, the payroll and human resource technology provider will top analysts' forecasts. Paycom beats EPS estimates 91% of the time and trades up an average of 4.2% on the day it reports, according to Bespoke.
Paycom will report earnings of 77 cents on revenue of $190.3 million, according to analysts polled by FactSet. Paycom reported earnings of 61 cents per share on revenue of $150.3 million in the same quarter a year prior.
Citigroup said it has high expectations for sustained growth and elevated profitability for Paycom.
"We like PAYC given strong mix of growth (>20%) and EBITDA margins (>40%) which cumulatively represent best of class in software," Citigroup analyst Daniel Jester said in a note to clients.
Shares of Paycom Software have soared an impressed 120% in the past year, bringing the company's market value to about $19 billion.
Of the 17 analysts that cover Paycom Software, eight have a buy rating on the stock, according to FactSet. Eight analysts have a hold rating and one has a sell rating.
Tools and equipment manufacture Snap-on reports quarterly earnings before the bell on Thursday. Bespoke Research shows Snap-on, which has a market value of about $9 billion, beats Wall Street estimates 90% of the time and trades up about 2.1% on average following earnings.
Analysts polled by FactSet are expecting Snap-on to report earnings per share of $3.08 on revenue of $965 million. Snap-on reported earnings of $3.03 per share on revenue of $953 million in the same quarter a year prior.
Shares of Snap-on are flat for the last 12 months.
Of the nine analysts that cover Snap-on, only three recommend buying the stock, according to FactSet. All of the other analysts have a hold rating.
To be sure, beating quarterly estimates isn't necessarily indicative of a company's health. Sometimes companies purposefully put out lower estimates, also known as sandbagging, so that they are virtually guaranteed to beat estimates.