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Hot stocks to watch, August 19, 2014: Second-quarter earnings from U.S. companies continue to come in stronger than expected.
Earnings per share (EPS) are running 10.2% above last year's results, reports S&P Capital IQ.
Roughly 59% of companies in the S&P 500 have beaten earnings estimates, and 60.7% have exceeded revenue forecasts, according to Bespoke Investment Group.
Retailers on average, however, have disappointed.
We'll see if the soft showing from the retail sector continues Tuesday with results from some key industry players. Also reporting earnings today are a leading medical device manufacturer and a small cap electronic component supplier.
Tuesday's Hot Stocks to Watch: HD, MDT, and 5 More
Hot Stocks to Watch No. 1: Home Depot Inc. (NYSE: HD) kicks off today's hot-stocks-to-watch list. The world's largest home improvement specialty retailer posts Q2 numbers before the open. Expectations are for HD to report EPS of $1.44, up from $1.24 in the same quarter a year ago. Whisper numbers are for EPS of $1.48. Revenue is projected to come in at $22.52 billion, up 5% year over year (YOY). In Q1, EPS of $0.96 was a solid 15.7% jump YOY, yet was still $0.04 shy of estimates. Still, the company raised its full-year fiscal earnings growth guidance to 17.6% from 16.5%. HD expects FY2014 EPS to come in at $4.42, up from previous forecast of $4.38. Amid a sputtering housing market, HD has benefited as homeowners try sell their homes, or as those spending more time at home, forgoing pricey vacations, spruce up their dwellings. The consensus analyst recommendation on HD is "Buy," according to Zacks Research. Shares are up a modest 2.19% year to date.
Hot Stocks to Watch No. 2: Medtronic Inc. (NYSE: MDT) reports fiscal Q1 earnings Tuesday morning. Analysts expect the medical device manufacturer to report EPS of $0.92, up from $0.88 in the same period a year earlier. Whisper numbers have MDT beating EPS forecasts by a penny. Revenue is expected to come in at $4.25 billion, a 4% YOY increase. Credit Suisse estimates the company's diabetes segment will show strong YOY growth of 10.2%, with a handful of other company segments projected to show growth from the same period a year ago. Medtronic made headlines in June after announcing it would buy Ireland-based Covidien Plc. (NYSE: COV) in a $42.9 billion deal. While both firms touted synergies, the move is lucrative in that it allows MDT to take advantage of Ireland's cut-rate 12.5% corporate tax rate in a tactic called a tax inversion.