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It's Earnings Season: 3 Hot Stocks to Watch This Month

Stocks have been on a bullish run leading up to this earnings season. During the past three months, the S&P 500 is up about 5.5%. But three hot stocks have crushed the S&P 500 -- and they're all poised to get lots of attention when they report their second-quarter results. Twitter (NYSE: TWTR), Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), and Facebook (NASDAQ: FB) have soared 39%, 16%, and 15%, respectively, in the past three months, outperforming the S&P 500 by a wide margin.

With all three of these tech stocks set to report their second-quarter results this month, here's a look at what to expect from each.

TWTR data by YCharts.

Twitter

Revenue and monthly active users will likely be two of the most insightful metrics for investors when Twitter reports earnings on July 27 before market open. Going into Twitter's second-quarter earnings release, expectations for Twitter's revenue are low.

On average, analysts expect Twitter to report second-quarter revenue of about $536 million, down 11% year over year. Twitter didn't provide revenue guidance for its second quarter, but its revenue in its first quarter decreased 8% year over year. 

Management says it's making progress on streamlining its revenue portfolio, including reallocating resources to its highest revenue-generating priorities, new revenue product features, and new demand channels. But it's unclear what this progress will have on Twitter's second-quarter revenue.

Twitter's monthly active users increased by about 6% year over year and 3% sequentially in Twitter's first quarter. Look for similar growth in the key metric in Twitter's second quarter.

Alphabet

Google's corporate parent Alphabet will be put to the test on July 24 when it reports its second-quarter earnings after market close. In the company's most recent quarter, both Alphabet's revenue and earnings per share (EPS) came in higher than expected. Investors are likely hoping Alphabet will outperform analyst expectations in Q2 again given the stock's recent solid performance, along with its 16% rise during the past three months.

On average, analysts are expecting Alphabet to report revenue and EPS of about $25.7 billion and $8.25, respectively. This compares to revenue and EPS of $21.5 billion and $8.42, respectively, in the year-ago quarter. Alphabet's expected year-over-year headwind in its EPS is likely primarily a function of analysts' attempts to factor in an EPS reporting change that no longer excludes the impact of stock-based compensation.

Facebook

Like Twitter, two of the most useful metrics to watch when Facebook reports earnings will be the company's revenue and user growth trends. In Facebook's first quarter, the social network's revenue jumped 49% year over year.

Analysts are expecting Facebook's revenue growth to decelerate in the second quarter -- but not by much. The consensus analyst estimate is for revenue of $9.2 billion, up about 43% year over year.

For Facebook's user growth, investors should look for year-over-year monthly and daily active user growth on par with growth achieved in Q1. Facebook's first-quarter monthly and daily active users increased 17% and 18%, respectively, year over year, and 4% sequentially (for both metrics).

Of course, investors should also look for any updates on user trends at Facebook's other social networks beyond the core Facebook platform. Going into the earnings release, monthly active users on Facebook's two messaging apps -- WhatsApp and Messenger -- are each at 1.2 billion. Monthly active users on Facebook's photo-sharing app, Instagram, are at 700 million.

Facebook reports second-quarter earnings on July 26 after market close. 

Image source: Getty Images.

With Twitter, Alphabet, and Facebook stocks significantly outperforming the S&P 500 in the past three months -- especially Twitter -- the pressure will be high when these stocks report results. Stay tuned at The Motley Fool for more coverage of these stocks this month.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Sparks owns shares of Facebook. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, and Twitter. The Motley Fool has a disclosure policy.