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Earnings season can be stressful — as a profit miss can spell trouble for stocks. But with some S&P 500 companies you can breathe easy; they haven’t missed a forecast in six years and counting.


Just 10 companies in the S&P 500, including IBD Long-Term Leaders in the health care sector Thermo Fisher Scientific (TMO) and UnitedHealth Group (UNH) plus tech leader Teradyne (TER), make a habit out of beating profit expectations. All these S&P 500 companies topped adjusted profit forecasts from analysts for 24 straight quarters, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.

Owning companies that easily top earnings forecasts quarter after quarter is a win for investors. That will especially be the case as third-quarter profit reporting season kicks off in earnest this week and next.

“Even though just a handful of companies in the S&P 500 have reported (third-quarter) results, expectations for this quarter, year, and for 2021 have already improved,” said Sam Stovall, market strategist at CFRA.

S&P 500: Lots Of Earnings Surprises Await

Investors and S&P 500 analysts are largely in the dark regarding profit in the third quarter. And that means many surprises might be on the way.

Just 10% of S&P 500 companies have reported their third-quarter earnings so far, says John Butters, earnings analyst at FactSet. And so far, 86% topped analysts’ earnings forecasts.

Better-than-expected S&P 500 profits have given the market an unexpected source of optimism. So far, S&P 500 profits are down just 18.4% in the quarter on a year-over-year basis. That’s markedly better than the 21% drop that S&P 500 analysts expected just a month ago.

Big surprises this quarter are coming mostly from the consumer discretionary sector. Consumer discretionary members Darden Restaurants (DRI) and Nike (NKE) topped third-quarter profit forecasts by 975% and 102%, respectively, more than any other S&P 500 companies, FactSet says.

And yet, some S&P 500 companies top views routinely.

S&P 500 Technology Profits Routinely Better Than Expected

Technology companies dominate the firms that topped profit estimates the past 24 quarters. Given the volatile nature of the sector, that’s somewhat expected.

The tech companies to routinely top earnings views include Lam Research (LRCX), Motorola Solutions (MSI), Arista Networks (ANET) and FleetCor Technologies (FLT) in addition to semiconductor test equipment maker Teradyne.

Looking at Teradyne’s track record shows how impressive it is.

The company didn’t just top earnings views the past 24 quarters. It did it by an impressive margin of 18.7% on average. Just look at its June quarter. The company reported an adjusted quarterly profit of $1.33 a share, which was more than double what it made in the same year-ago quarter. And those results topped analysts’ views by nearly 30%. Teradyne has topped views by 10% or more in 22 of the past 24 quarters.

Shares of Teradyne are up nearly 27% this year and carry a high IBD Composite Rating of 97. Teradyne reports third-quarter results on Oct. 20.

Finding Good Surprises From Health Care Long-Term Leaders

Given the stability of the health care industry, you’d think surprises would be hard to come by. Not for IBD Long-Term Leaders.

Lab equipment maker Thermo Fisher Scientific has seen shares soar nearly 42% this year. The company is finding growth from new markets as health research is even more critical than usual. The company’s second-quarter profit topped expectations by nearly 35%. And the company has topped analysts’ profit forecasts by 3.6%, on average, the past 24 months. Thermo Fisher Scientific reports next on Oct. 21. Analysts are looking for 46% profit growth.

Health insurer UnitedHealth is also finding ways to top views again and again. The company surpassed earnings forecasts by more than 35% in the second quarter. It reported on Oct. 14. And UnitedHealth has exceeded profit expectations by 5.2%, on average, the past 24 months. Analysts are already hoping profit will jump more than 10% in 2021.

Will some of these companies eventually disappoint? Perhaps. But it’s hard to argue with a six-year track record, including mind-blowing performance during a pandemic-stricken year.

S&P 500 Companies Topped Profit Forecast 24-Straight Quarters

Company Symbol Sector Avg. EPS Beat 24-Quarters Composite Rating
Teradyne (TER) Information Technology 18.7% 97
Thermo Fisher Scientific (TMO) Health Care 3.6 96
Lam Research (LRCX) Information Technology 7.0 95
Prologis (PLD) Real Estate 146.5 87
UnitedHealth Group (UNH) Health Care 5.2 87
Motorola Solutions (MSI) Information Technology 15.8 70
Johnson & Johnson (JNJ) Health Care 3.3 60
Arista Networks (ANET) Information Technology 19.0 59
FLEETCOR Technologies (FLT) Information Technology 2.7 55
Omnicom Group (OMC) Communication Services 3.4 50
Sources: IBD, S&P Global Market Intelligence

Follow Matt Krantz on Twitter @mattkrantz


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