These 20 companies are big winners this earnings season. What do analysts think about their stocks?

Companies excluded from this screen include many semiconductor manufacturers, such as Nvidia
NVDA,
+1.65%,
which is scheduled to announce results on Aug. 23 for its fiscal 2024 second quarter, which ended on July 31. When the company last reported earnings in May, it predicted a 50% sequential increase in sales for the second quarter, because of ballooning volumes of shipments of graphics processing units used by data centers to support their corporate customers’ deployment of artificial intelligence.

Rebecca Irwin, a portfolio manager at Jennison Associates who co-manages the $5.5 billion PGIM Jennison Global Opportunities Fund PRJAX, said in a recent interview that she had never seen a similar sales-growth projection. We will screen dozens of semiconductor companies for sales growth and profit margins following Nvidia’s Aug. 23 report.

Below is a screen of companies that showed three areas of improvement in their results for fiscal quarters ending May 15 or later:

• Quarterly sales were up from the year-earlier quarter.

• Gross profit margins improved. 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, including labor. It is a useful measurement of pricing power, and a combination of an expanding gross margin and increasing sales is a good sign.

• Operating margins improved. A company’s net operating margins goes further, subtracting more overhead and other expenses that aren’t directly related to the production of goods and services sold. It is, essentially, earnings before interest and taxes (EBIT), divided by sales.

Profit margins vary widely by industry. They are most useful when looking at their movement for individual companies.

In the following screen we are not looking at earnings per share, because so many one-time factors can affect profit numbers for any company in any quarter and can even distort bottom-line results for a full year.

Among the 418 companies in the S&P 500 being screened, data for gross and operating margins were available from FactSet for the most recent and year-earlier quarters for 262 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.

Among the remaining 262 companies, 118 passed the screen with increasing sales and improved gross and operating margins.

Here are the 20 companies that passed the screen while showing the largest increases in quarterly sales from a year earlier:

Click on the tickers for more about each company.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

The top four companies on the list are all operating within industries (casinos and cruise lines) that were acutely affected by shutdowns in the travel industry at the height of the COVID-19 pandemic in 2020. The travel industry’s sales numbers shot up as restrictions were lifted. What may interest you is that among the top four companies on the list, all reported higher sales for the most recent quarter than 16 quarters earlier in 2019, except for Las Vegas Sands Corp.
LVS,
+0.68%.
For this casino operator, second-quarter net revenue of $2.54 billion was 24% below the $3.33 billion in the second quarter of 2019.

In case you are wondering, Tesla Inc.
TSLA,
-0.95%
didn’t pass the screen, despite a 47% increase in second-quarter revenue from a year earlier, because its profitability declined as it lowered electric-vehicle prices. The company’s gross margin narrowed to 18.19% in the second quarter from 25% a year earlier, while its operating margin narrowed to 14.25% from 20.83%.

Here’s the list again of 20 companies that passed the screen with the highest sales growth, this time with summaries of ratings and consensus price targets among analysts polled by FactSet:

As always, you should do you own research to form your own opinion about any company before making an investment.

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