What does an S&P 500 stock need to do to get attention in this market? You'd think doubling profit (or more) would do it — but apparently not.
Eight stocks in the S&P 500 — including Seagate Technology, Vistra and Micron Technology — are expected to post 100% or higher earnings-per-share growth in the first quarter. But rather than celebrating such robust growth, investors are selling off the shares, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge.
Shares of these eight earnings-growth overachievers are down an average of 15% this year so far. That's double the 7.7% loss of the S&P 500 this year.
"Volatility in markets can be painful, and anxiety levels are understandably high," said Megan Horneman, chief investment officer at Verdence Capital Advisors. "It is important to understand that we have seen wild swings in the markets before and they have typically created good long-term buying opportunities."
What's Up For S&P 500 First-Quarter Earnings
So far, analysts are calling for 7% earnings growth in the first quarter for the S&P 500, says John Butters, research analyst at FactSet. And if that materializes, it would mark the seventh straight quarter of earnings growth.
And that's why a stock like Seagate is such a standout. Analysts think the company will earn $1.75 a share in the first quarter, up more than 429% from the same year-ago period. And solid profits explain the stock's EPS Rating of 82. But despite robust bottom-line growth, the stock is down nearly 16% this year. That means the stock's RS Rating is just 21. It's not a buy, as the stock is trading below the 200-day moving average.
Now look at utility Vistra. Analysts see profit jumping 303% in the first quarter, in part due to demand from AI. But the stock is down 18% this year. The RS Rating is holding up, though, at 79.
Not All Growers Are Suffering
Eight of the 10 S&P 500 stocks seen putting up at least 100% growth are down this year. But there are exceptions.
Shares of Uber and Expand Energy are up 22% and 4% this year, respectively. And both are seen putting up big growth in the first quarter. Analysts think Uber's first-quarter profit will jump 293% and Expand's will leap 213%.
Granted, the first quarter is just one data point. Much will hinge on future quarters, when the Trump administration's policies have more time to sink in.
Sinking On The Double?
These S&P 500 stocks are down this year despite 100%-plus EPS growth seen for the first quarter
| Stock | Ticker | EPS Q1 chg | YTD stock chg |
|---|---|---|---|
| Seagate Technology | STX | 429.1% | -15.6% |
| Vistra | VST | 303.6% | -18.4% |
| Micron Technology | MU | 239.2% | -15.2% |
| Kimco Realty | KIM | 208.2% | -13.3% |
| Discover Financial | DFS | 200.9% | -8.2% |
| International Paper | IP | 136.6% | -11.9% |
| Enphase Energy | ENPH | 105.9% | -20.5% |
| CarMax | KMX | 105.4% | -17.3% |
