As the Q3 U.S. earnings season continues, we summarize the StarMine reports on five companies likely to deliver positive surprises and five that look set to report big disappointments.
As we do each quarter, we selected 10 companies that we expect to fall into one or the other of these two camps, based on SmartEstimate and Predicted Surprise data. We have summarized that data and the facts behind it for each of the companies below. Historically, our selections have demonstrated an accuracy rate of about 75%, giving investors an edge when it comes to positioning themselves ahead of the earnings announcements. To take a look at how we did last quarter, click here.
When the North American earnings season wraps up, we’ll report back on how the companies fared – and give you a look at what they said about their outlook for the next year.
Here is the list, along with some analyst views.
TOP POSITIVE SURPRISE FORECASTS:
1. L Brands Inc. (LB.N) did not have to resort to discounting as demand remained strong at Victoria’s Secret.
2. Century Aluminum Co. (CENX.O) saw rising aluminum prices and reduced supplies, trends that are likely to lift earnings.
3. Garmin Ltd. (GRMN.O) saw strong demand for its wearable technologies, looking toward the New York City Marathon. Improving margins are likely to help earnings.
4. Calpine Corp. (CPN.N) benefits from the focus on environmentally-friendly power. It is finally seeing margins creep back up.
5. Impax Laboratories (IPXL.O) may be turning around after being hit by FDA decisions. The generics business continues to generate strong earnings.
TOP NEGATIVE SURPRISE FORECASTS:
1. Wynn Resorts Ltd. (WYNN.N)) is suffering from the anti-corruption clampdown in China that affects its VIP customers.
2. IMAX Corp. (IMAX.N) saw poor box office this quarter and is ramping up capital expenditures.
3. Acorda Therapeutics Inc. (ACOR.O) is seeing flattening sales of its primary drug, Ampyra, which is likely to weigh on earnings.
4. PDC Energy (PDCE.O) is feeling the effects of falling oil and natural gas prices in a period of increased investment.
5. Axiall Corp. (AXLL.N) depends on the housing market for its PVC products and the market seems to have slowed down. Input costs have been rising but PVC prices have not, pressuring margins.
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