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3 Stocks to Consider Buying Before Earnings

Progressing through earnings season this week a few top-rated stocks are reporting from a variety of sectors that investors will want to watch.

Here are 3 stocks among the Zacks Retail Wholesale, Computer and Technology, and Consumer Staples sectors that are worthy of consideration before their quarterly reports.

Expedia Group (EXPE)

Starting the list is online travel company Expedia, which is set to report its Q4 earnings on Thursday, February 9. Expedia is out of the Retail-Wholesale sector and its Internet-Commerce Industry is currently in the top 15% of over 250 Zacks Industries.

With travel demand expected to remain robust following the pandemic, Expedia stands to benefit through its web portals that focus on travel planning, travel purchases, and travel experience sharing that brings suppliers and consumers of travel-related services together.

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Furthermore, carrying a Zacks Rank #1 (Strong Buy) earnings estimate revisions have gone up 3% over the last quarter for Expedia’s fiscal 2023 as the company rounds out FY22.

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Zacks Investment Research


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Q4 Preview: Expedia’s Q4 earnings are expected at $1.85 per share, which would be a 74% increase from Q4 2021. Fiscal 2022 earnings are now projected to rebound 350% to $7.44 per share compared to EPS of $1.65 in 2021. Plus, fiscal 2023 earnings are projected to climb another 24% to $9.21 per share. 

On the top line, Q4 sales are forecasted to be $2.68 billion, up 18% from the prior year quarter. Total sales are now anticipated to be up 36% for FY22 and rise another 9% in FY23 to $12.78 billion. More importantly, Fiscal 2023 sales would be 6% above pre-pandemic levels with 2019 sales at $12.06 billion.

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Zacks Investment Research


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Earnings ESP: The Zacks Expected Surprise Prediction indicates that Expedia could significantly top Q4 bottom-line estimates with the Most Accurate Estimate at $1.99 per share and the Zacks Consensus having EPS at $1.85.

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Zacks Investment Research


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Takeaway: Expedia’s top and bottom line appear to be back on the path to continued growth and the rising earnings estimate revisions for FY23 are an indication that the company could also provide upbeat guidance in its outlook.

Even better, Expedia stock is now up +36% to start the year and still trades at just 16.5X forward earnings. This is 56% below its decade-long high of 38X and a 21% discount to the median of 21X, suggesting there could be plenty of upside left in EXPE stock, especially with earnings on the rise.

Lyft (LYFT)

Another stock investors may want to consider buying this week is ride-hailing company Lyft which is also set to release its fourth-quarter earnings on Thursday, February 9.

Lyft has remained focused on ride-sharing and building its multimodal transportation network in the United States and Canada while competitor Uber Technologies (UBER) is making a global push and implementing food transportation into its ride-hailing service along with freight transportation services.

However, unlike Uber, Lyft is already profitable as its operating costs are a lot lower with its expansion centered around its core business. To that note, Lyft stock is sporting a Zacks Rank #2 (Buy) as earnings estimates have started to slightly go up again over the last 30 days.

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Zacks Investment Research


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Q4 Preview: Lyft’s Q4 EPS is expected at $0.10 a share, up 11% from $0.09 per share in Q4 2021. Even better, this would round out fiscal 2022 earnings at $0.41 per share, compared to EPS of -$0.25 a share in 2021 and FY23 earnings are projected to climb 120% to $0.90 per share.

Fourth-quarter sales are forecasted to be $1.16 billion, up 19% from the prior year quarter. Total sales would be up 27% YoY for FY22 and are projected to jump another 19% in FY23 to $4.87 billion. Plus, with 2019 sales at $3.61 billion, FY23 would represent 35% growth from pre-pandemic levels.

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Zacks Investment Research


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Earnings ESP: Lyft is expected to top Q4 earnings expectations with The Zacks Consensus at $0.10 per share and the Most Accurate Consensus at $0.14 a share.

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Zacks Investment Research


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Takeaway: Considering Lyft’s bottom line is already in the black, its stock looks very attractive at around $17 per share with Uber stock in comparison at $33 per share. While the traditional P/E valuation metric is not able to be used for Lyft or Uber stock yet, it is noteworthy that Lyft’s price to sales is more attractive at 1.2X Vs. Uber’s 1.8X and is also well below the S&P 500’s 3.5X.

Lastly, a strong Q4 earnings beat could continue to spark Lyft’s stock which has now rallied 83% off its December lows with shares up 62% YTD to crush the broader indexes’ strong start to the new year. 

Ralph Lauren (RL)

Rounding out the list is premium apparel retailer Ralph Lauren out of the Consumer Staples sector which is set to report its fiscal third-quarter earnings on February 9.

As a leading international designer, marketer, and distributor of clothing, footwear, accessories, and home furnishings among other product categories RL stock sports a Zacks Rank #2 (Buy) with annual earnings estimates trending higher again leading up to its quarterly report.

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Zacks Investment Research


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Q3 Preview: Ralph Lauren’s fiscal Q3 earnings are expected at $2.91 per share, which would be a -1% dip from Q3 2022. Fiscal 2023 earnings are now projected to decline -7% to $7.75 per share compared to EPS of $8.38 in 2022.

However, fiscal 2024 earnings are projected to rebound and climb 14% to $8.86 per share. On the top line, Q3 sales are forecasted to be $1.75 billion, down -3% from the prior year quarter. Total sales are now forecasted to be virtually flat in FY23 but rise 5% in FY24 to $6.58 billion.

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Zacks Investment Research


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Earnings ESP: The Zacks Expected Surprise Prediction indicates that Ralph Lauren could top its fiscal Q3 bottom-line estimates with the Most Accurate Estimate at $2.95 per share and the Zacks Consensus having EPS at $2.91.

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Zacks Investment Research


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Takeaway: With Ralph Lauren’s stock trading attractively relative to its past from a valuation standpoint, a strong earnings beat would be a nice catalyst and could lead to more upside. Shares of Ralph Lauren have rallied 14% to start the year topping the S&P 500’s +7% with RL stock trading at 15.6X forward earnings and well below its decade-long high of 242.3X and 10% beneath the median of 17.4X.

Bottom Line

These three stocks offer diversification in investment portfolios across multiple sectors and appear to have more upside left despite their strong performances to start 2023. The possibility of topping bottom-line expectations is also intriguing as strong earnings beats could be a further catalyst for Expedia, Lyft, and Ralph Lauren stocks.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Expedia Group, Inc. (EXPE) : Free Stock Analysis Report

Ralph Lauren Corporation (RL) : Free Stock Analysis Report

Lyft, Inc. (LYFT) : Free Stock Analysis Report

Uber Technologies, Inc. (UBER) : Free Stock Analysis Report

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