When the market experiences uncertainty, companies with strong fundamentals shine through. In today's IBD Screen of the Day, companies with rising profit expectations are highlighted. All three names have earnings upcoming.
AmerisourceBergen has pulled back and is now holding near its 129.64 buy point, although market risk remains high. The wholesale generic-drug company will kick off fiscal 2022 when it reports first-quarter earnings on Feb. 2.
Past growth for AmerisourceBergen has been steady. In 2021, full-year earnings per share of $10.68 represented solid 15% growth over $9.26 a year prior. This quarter, company analysts have a projected EPS of $2.53 with a revenue of $59.7 billion.
However, analysts have chronically underestimated AmerisourceBergen's earnings — the company has beaten EPS estimates for 24 straight quarters. Given this, the current 2022 full-year EPS guidance of $11.49 is probably low, signifying lots of potential growth for the drug distributor and manufacturing services provider.
Vertex Reports Wednesday
Vertex Pharmaceuticals is another drug manufacturer displaying impressive profit growth. The maker of cystic fibrosis drugs is set to report earnings on Wednesday after the market close.
EPS is estimated at $3.26, with a revenue of $2 billion. Investors should expect beats on both these numbers, as with AmerisourceBergen. Vertex analysts have consistently underestimated numbers. The company has beat both EPS and revenue estimates for 12 straight quarters.
Vertex Pharmaceuticals has had an impressive growth rate, with three-year EPS and sales growth rates at 56% and 29%, respectively. Vertex is forming a long base with a handle and has a 224.50 buy point, per MarketSmith research.
Silicon Motion Hits Support, Earnings Upcoming
For investors betting on a quick market recovery, semiconductor stock Silicon Motion could offer a good bet after testing its 10-week moving average on a pullback.
Silicon Motion reports its fourth-quarter results on Thursday morning, with an estimated EPS of $1.76 and revenue of $262 million. The company will hope to end the fiscal year off in style: 2021 full-year earnings per share estimated at $6.01, over an 85% increase from a year prior. Analysts expect growth to continue into next year, with 2022 EPS projected at $7.11.
Investors interested in entering positions in these names should take into account the added risk of investing in stocks before their earnings and higher risk due to current market volatility.
