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Earnings season is around the corner. So how do analysts expect IBD’s top 50 growth stocks to fare?
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Here is a rundown of earnings estimates for the most recent quarter based on FactSet’s poll. Most just concluded their fiscal third quarter, though there are a few exceptions.
The IBD 50 stocks list has several software names with strong earnings growth estimates. Most prominent is Duolingo (DUOL), which is expected to see a 320% increase in earnings. The language learning app maker turned profitable in the second quarter and expects midpoint sales of $131 million in its third quarter — or 36% growth from the year-ago quarter.
Dow Jones giant Salesforce (CRM) is also one to watch. Analysts expect earnings to jump 268% after rising just 10% a year ago. Its third quarter for fiscal 2024 is scheduled to conclude around the end of October.
Software design names are not far behind. Cadence Design Systems (CDNS) and Synopsys (SNPS) hold a spot on the growth list amid high expectations. Analysts predict earnings to grow 52% for Cadence, which saw profits grow 33% in the year-ago quarter. Analysts expect even higher earnings growth of 98% for Synopsys after a tepid 5% growth the prior year. Synopsys’ fiscal fourth quarter is due to end this month.
Growth Stocks: Meta’s Turnaround Story To Continue
Analysts also see earnings for Meta Platforms (META) growing 55%. In the year-ago period, Meta’s earnings declined 49%. The Facebook parent offered an outlook of 20% revenue growth to $33.25 billion at the midpoint for its third quarter. That is higher than Wall Street’s consensus estimate of $31.22 billion. Meta’s turnaround has been largely due to automation tools it has introduced for its ads platform.
In health care, Eli Lilly (LLY) is expected to see earnings grow 47%, up from 12% in the prior-year quarter. Novo Nordisk (NVO) predicts a hefty 61% gain in earnings after a 2% decline in the year-ago period. But analysts are even more bullish on Amphastar Pharmaceuticals (AMPH) with views of 83% growth after a 17% decline.
Among finance stocks, Interactive Brokers (IBKR) is seen having a roughly flat growth rate of 39%, almost unchanged from the 38% reported the prior year. A turnaround story in a related group is Apollo Global Management (APO). After a loss last year, analysts see earnings growing 35% for the investment management firm.
Tesla Earnings Set To Decline
Tesla (TSLA) earnings are set to decline 28% in the current quarter. The electric-vehicle behemoth is due to report third-quarter earnings Oct. 18. Earnings grew 69% in the third quarter of 2022. Late Thursday, the EV giant cut its prices for Model 3 and Model Y again. It also has shut down plants, and those moves will likely affect production and margins.
Building products specialist Comfort Systems (FIX) is expected to see 28% earnings growth, slightly lower than 31% from the year before. Modine Manufacturing (MOD)’s fantastic 220% earnings surge a year ago is expected to drop off to 37% for the current quarter. Modine is due to report second-quarter results for fiscal 2024 in coming weeks.
Most of the stocks in the growth 50 have a superior Composite Rating of over 90.
According to the CAN SLIM stock picking methodology, current earnings or the “C” in the acronym is one of the most important factors that investors should check since it measures a company’s profitability in the most recent quarter.
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