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5 Buy-Ranked Stocks Poised To Beat Earnings

Earnings estimate revisions and projections are incredibly vital to the Zacks Rank, and as we approach the start of earnings season, these reports can strongly affect a stocks future performance and a company’s financial expectations.  

Zacks Premium customers can utilize the Earnings ESP (Expected Surprise Prediction) filter in order to search for stocks that are expected to defeat their projected earnings estimates. A positive Earnings ESP, along with a Zacks Rank of #3 (Hold) or better, can be a solid indicator of an impending earnings surprise.

The Zacks Earnings ESP filter enables us to discover firms that are projected to beat their earnings estimates, so check out these 5 stocks to buy now:

1.       Blackrock, Inc. BLK

Blackrock, Inc. is one of the largest investment management firms in the United States, offering a variety of investment products to institutional and individual investors. Blackrock has continued to expand, largely through the acquisitions of Bank of America’s Money-Market Fund Business, FutureAdvisor, MGPA, and Credit Suisse’s ETF business.

The company pays a strong 2.32% dividend and sponsors a formidable share repurchase program. Blackrock also features a net margin of 29.74% and cash flow per share of $21.52, which compares favorably to the industry averages of 15.60% and $1.55. Also, the company holds an impressive cash/price ratio of 13.50, which beats the industry average of 4.31.

Blackrock has defeated earnings projections in seventeen of its past twenty operational quarters, dating back to 2012. BLK was recently promoted to a Zacks Rank #2 (Buy), and with an Earnings ESP of 0.75%, we can feel more confident about its ability to beat earnings estimates again.  

2.       Visa Inc. V

Visa operates the world’s largest retail electronic payments network and is one of the most recognized global financial service brands. Organic growth remained a key strength at Visa, as is reflected by its revenue growth in the past. Visa has recorded CAGR of 20% over the five past fiscal years, and that trend has continued early in 2017.

Recently, there has been a general shift in the global payment industry from paper-based forms toward electronic forms of payment. Despite increasing competition within the electronic payment space, Visa is expected to continue as the market leader due to its tremendous investments in technology, security and marketing.

Visa sports a strong debt/equity ratio of 0.56 and projected EPS growth of 18.29%, which defeat the industry averages of 0.93 and 10.16%, respectively. Also, Visa holds an impressive debt/capital of 31.48% in comparison to the industry average of 49.50%.

Visa has consistently beaten its earnings projections in each of the past twenty operational quarters, dating back to 2012. Visa Inc. currently possesses a Zacks Rank #2, and if its track record of earnings beats wasn’t enough, its Earnings ESP of 1.25% should make investors feel better about its chances to beat earnings estimates this quarter.

3.       Honeywell International Inc. HON

Honeywell International is a diversified technology and manufacturing company, serving customers worldwide with products and services relating to technologies for buildings, homes, and other entities. Honeywell has regularly fine-tuned its portfolio, having sold about 60 of its units (accounting for $7 billion in sales) since 2002 and acquiring another 90 companies that have contributed $14 billion in revenue over the same period. Also, the company has $300 million in its fund for restructuring initiatives to improve its overall cost position and drive further margin expansion going forward.

Honeywell features a RoE of 25.73% and current cash flow growth of 7.91%, which beat the industry averages of 6.92% and 0.41%, respectively. Furthermore, Honeywell holds an impressive current ratio of 1.36.

Honeywell International currently holds a Zacks Rank #2 (Buy), and with a positive Earnings ESP of 0.56%, this stock is looking strong heading into earnings season.

4.       CSX Corporation CSX

CSX Corporation focuses on a unique combination of rail, container-shipping, intermodal and logistics services that provide global reach. Since 2005, the company’s dividend has been increased thirteen times. Also, the firm cleared a new $1 billion share buyback program, which is expected to be completed by April 2018. Further, driven by improved efficiencies, the company expects the bottom line to expand by 25% year-over-year in 2017.

CSX Corporation currently sports a “B” grade in Momentum on our Style Scores System, partially because its share price has increased by 100.37% over the past year. Additionally, CSX holds a projected EPS growth of 27.07% in comparison to the industry average of 12.91%, which has helped the company receive an “A” grade for Growth.

CSX Corporation currently possesses a Zacks Rank #2 (Buy), and with an Earnings ESP of 1.72%, the firm holds a positive financial outlook as we approach earnings season.

5.       Cintas Corporation CTAS

Cintas Corporation focuses on providing a specialized service to businesses of all types, including small service and manufacturing companies to major corporations. Cintas recently completed the acquisition of rival G&K Services Inc. after receiving all the regulatory approvals. The synergies from the combined operations are expected to yield around $140 million in cost savings and are anticipated to greatly increase Cintas’ earnings.

Cintas sports a beta rating of 0.83 and pays its shareholders a respectable 1.06% dividend. Cintas’ share price has increased by 29.06% over the past year, which has partially led to the company receiving an “A” grade for Momentum on our Style Scores System. Cintas features a RoE of 23.75% and net margin of 10.25%, which compare favorably to the industry averages of 12.01% and 7.12%.

Cintas Corporation was recently promoted to a Zacks Rank #2 (Buy), and possesses an Earnings ESP of 0.93% as we near the end of its operational quarter.

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