By Philip van Doorn, MarketWatch
Plenty of companies have produced double-digit sales increases and wider profit margins during an otherwise dismal earnings season
There's no question that third-quarter earnings season has been pretty bad. But there are always companies that outperform, and we have listed a group of sales-growth winners below.
First, the bad news
Through Monday, 97% of the S&P 500 had reported results for fiscal quarters ended July 26 or later. According to the most recent Consensus Snapshot report from S&P Global Market Intelligence, combined and weighted earnings per share (EPS) for the S&P 500 were down an estimated 4.1% from a year earlier -- which was even worse than the estimate of a 3.3% decline a month ago.
That runs counter to the usual trend among sell-side analysts of setting up earnings "beats" by incorporating lowered guidance from the companies they monitor into earnings (and sales) estimates that are, arguably, too low. Then again, according to S&P Global, 86% of the reporting companies have beaten consensus earnings estimates, 62% have beaten sales estimates and 57% have beaten both.
Here's a summary of the most recent estimates for changes in third-quarter earnings per share from a year earlier:
S&P 500 sector Estimated change in EPS
Communications Services 0.07%
Consumer Discretionary -0.01%
Consumer Staples -0.54%
Health Care 1.81%
Information Technology -8.56%
Real Estate -14.34%
S&P 500 Index -4.11%
Source: S&P Global Market Intelligence
That's a lackluster quarter, reflecting a less-than-favorable market for commodity and energy prices, as well as the effect of the trade conflict between the U.S. and China on the technology sector. Semiconductor manufacturers were hit particularly hard.
However, investors have been hopeful of an easing of trade tensions, or at least a resumption of sales growth (iShares PHLX Semiconductor ETF (SOXX), which holds all 30 stocks in the PHLX Semiconductor index, has risen 52% year-to-date.) for the semiconductor group next year from 2019's lower base. The
Sales and margin winners
Any company will wish to increase its revenue, but it will also try to improve its gross margin, which is its sales, less the cost of goods sold, divided by sales. It is a measure of a company's pricing power. An expanding margin as sales rise is a very good sign. A narrowing margin may indicate the company is being forced to defend its market share with discounts or is pushing sales growth over profitability. If the margin continues to narrow, the company may be facing a very difficult market for its products or services.
Gross margin isn't used by analysts who track banks and insurance companies.
Among the S&P 500 companies that had announced results for fiscal quarters ended July 26 or later through Nov. 12, here are the 20 that reported the largest increases in sales, while also expanding their gross margins:
Company Ticker Industry Sales growth - most recent quarter from a year earlier Change in sales per share - most recent quarter from year-earlier quarter Gross margin - most recent quarter Gross margin - year-earlier quarter
Fiserv Inc. US:FISV Data Processing Services 122% 53% 48.31% 45.33%
Newmont Goldcorp Corp. US:NEM Precious Metals 56% 2% 22.85% 20.81%
Prologis Inc. US:PLD Real-estate investment Trusts 38% 26% 44.12% 36.22%
CVS Health Corp. US:CVS Drugstore Chains 36% 7% 17.78% 15.90%
Fidelity National Information Services Inc. US:FIS Data Processing Services 35% -14% 34.87% 34.55%
Marathon Petroleum Corp. US:MPC Oil Refining/Marketing 35% -7% 8.84% 7.84%
Netflix Inc. US:NFLX Cable/Satellite TV 31% 31% 40.93% 39.68%
Autodesk Inc. US:ADSK Software 29% 27% 88.76% 88.04%
MarketAxess Holdings Inc. US:MKTX Investment Banks/Brokers 28% 27% 87.19% 86.60%
Alexion Pharmaceuticals Inc. US:ALXN Biotechnology 23% 24% 85.14% 83.33%
NextEra Energy Inc. US:NEE Electric Utilities 23% 8% 34.52% 28.29%
Incyte Corp. US:INCY Biotechnology 23% 22% 93.02% 92.61%
Intuitive Surgical Inc. US:ISRG Medical Specialties 23% 22% 69.63% 69.53%
Dominion Energy Inc. US:D Electric Utilities 22% -2% 61.86% 61.40%
CenterPoint Energy Inc. US:CNP Electric Utilities 21% 4% 16.27% 14.24%
Copart Inc. US:CPRT Mis. Commercial Services 21% 24% 43.65% 40.91%
Fortinet Inc. US:FTNT Computer Communications 21% 21% 71.16% 70.15%
Vertex Pharmaceuticals Inc. US:VRTX Biotechnology 20% 20% 85.96% 85.79%
PayPal Holdings Inc. US:PYPL Data Processing Services 19% 20% 44.47% 39.77%
Ansys Inc. US:ANSS Software 19% 19% 86.87% 86.25%
You can click on the tickers for more about each company.
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November 13, 2019 07:56 ET (12:56 GMT)
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