Third-quarter EPS season is in the homestretch, with blue-chip Utilities, Financial Services, Consumer and Industrial companies all releasing reports. Through 11/1/2019, Refinitiv reported that 356 S&P 500 companies have now announced 3Q earnings, with 76% coming in above consensus, ahead of the past four-quarters average percentage of 74%. The better-than-expected results have improved the overall forecast for the quarter to a -0.8%, from -3.2% at the start of the reporting season. Our analysts are always on the lookout for companies that raise their outlooks during earnings season. Management’s ability to “raise guidance” can often be a catalyst to strong returns in the quarters ahead. Following are 12 BUY-rated companies in Argus coverage for which management has raised guidance during the current EPS reporting season.
Boston Scientific Corp. (BSX): Boston Scientific is a developer, manufacturer and marketer of medical devices. Along with its 3Q results, management updated its 2019 guidance. The company now projects full-year revenue growth 11%-11.5% on an operational basis (raised from 8%-9%). In addition, it now projects full-year adjusted earnings of $1.55-$1.58 per share (compared to an earlier estimate of $1.54-$1.58).
General Electric Corp. (GE): GE is a large-cap diversified Industrial company. Along with the 3Q results, the new management team updated and adjusted its full-year guidance. Management expects GE Industrial segment organic revenue to grow in the mid-single-digit range and looks for the segment margin to be flat to up 100 basis points. It expects adjusted EPS of $0.55-$0.65. These were all the same quarter over quarter. Importantly, management raised its adjusted GE Industrial free cash flow to flat-to-positive $2 billion from the previous positive $1 billion to negative $1 billion.
Honeywell Inc. (HON): Honeywell is a diversified technology and manufacturing company. Along with the company’s 3Q results, management once again raised its 2019 guidance. The company now expects EPS of $8.10-$8.15, versus a prior forecast of $7.95-$8.15.
Lockheed Martin Inc. (LMT): Lockheed Martin provides advanced technology systems, products and services to the U.S. government and international defense customers. The company also once again raised guidance for 2019. Management expects top-line growth of 10%; diluted EPS of $21.55, up from $20.85-$21.15; and cash from operations above $7.6 billion. We note that Lockheed has a history of lowering investor expectations early in the year and then boosting its outlook as the year progresses.
Mastercard Inc. (MA): Mastercard operates the world's second-largest electronic payments network. Along with the 3Q19 results, management offered updated 2019 guidance that calls for currency-neutral revenue growth at the high end of the low teens (from a prior low teens), and operating expense growth in the high single digits.
Moodys Inc. (MCO): Moody’s is a large-cap financial services company. Along with its 3Q results, management once again raised its 2019 guidance. The company expects mid-single-digit revenue growth, an adjusted operating margin of 48%, and EPS of $8.05-$8.20, up from the prior outlook of $7.95-$8.15, and implying growth of 10% at the midpoint of the range.
Northrop Grumman Inc. (NOC): Northrop Grumman is a leading global defense contractor, providing systems integration, defense electronics, information technology, and advanced aircraft and space technology. Along with the 3Q results, management raised its 2019 EPS guidance. Management now expects adjusted EPS of $20.10-$20.35, up from a prior $19.30-$19.65.
Pfizer Inc. (PFE): Pfizer is a leading global developer and manufacturer of pharmaceuticals and biotech drugs. Along with the 3Q results, management raised its guidance for 2019. It now expects adjusted EPS of $2.94-$3.00, up from a prior view of $2.76-$2.86. It also expects revenue of $51.2-$52.2 billion, up from a prior view of $50.5-$52.5 billion.
S&P Global Inc. (SPGI): S&P Global Financial Inc., based in New York, is a diversified financial services company. Along with the 3Q results, management once again raised its 2019 guidance. The company expects mid-single-digit revenue growth and EPS of $9.30-$9.40, up from a prior $9.10-$9.25, implying growth of 10%. SPGI management has a history of setting the earnings bar low and raising it as the year progresses.
Thermo Fisher Scientific (TMO): Thermo Fisher manufactures scientific instruments, consumables, and chemicals. The company updated its 2019 guidance with its 3Q results. It now expects adjusted EPS of $12.28-$12.34, up from a prior view of $12.16-$12.26. It also projects revenue of $25.34-$25.50 billion, up at the low end from a prior $25.30-$25.50 billion.
UnitedHealth Group Inc. (UNH): UnitedHealth Group is the nation's largest publicly traded managed care company. After reporting 3Q results, UNH updated its 2019 guidance. It now projects adjusted EPS of $14.90-$15.00, up from a prior view of $14.70-$14.90.
United Technologies Inc. (UTX): United Technologies is an industrial conglomerate with a wide range of businesses. Along with reporting the company’s 3Q results, management raised guidance for 2019. The company is expecting organic sales growth of 4%-5%, adjusted EPS of $8.05-$8.15 (up from the prior range of $7.90-$8.05) and free cash flow of $5.3-$5.7 billion, up from $4.5-$5.0 billion.
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