5 Stocks that Beat Earnings Estimates

In this article we discuss the 5 stocks that beat the earnings estimates. If you want to read our detailed analysis of these companies, go directly to the 10 Stocks that Beat Earnings Estimates.

5. Kellogg Company (NYSE: K)

Number of Hedge Fund Holders: 32

Packaged food giant Kellogg enjoyed elevated demand for its products during the Covid-19 pandemic. Its food products range from crackers and snacks to protein bars and vegetarian burgers. While life has pretty much returned to normal, Kellogg continues to do well in terms of financial performance.

The company last week announced earnings of $1.11 per share for the quarter ended July 3, slightly higher than $1.02 per share in the year-ago period. On an adjusted basis, Kellogg earned $1.14 per share, ahead of the consensus forecast of $1.03 per share.

Revenue inched up 3 percent on a year-over-year basis to $3.555 billion, surpassing analysts’ average estimate of $3.431 billion. Overall quarterly sales were mainly driven by Kellogg’s double-digit growth in emerging markets.

Speaking on the performance, CEO Steve Cahillane said, “Our second quarter results again highlighted the resilience and determination of our organization as well as the effectiveness of our Deploy for Growth strategy and reshaped portfolio. “On a 2-year basis, taking into account the lapping of an unusual 2020, we continued to deliver a balance of strong top-line growth, consumption growth, profitability, and cash flow generation.”

Kellogg reiterated its sales outlook for 2021. The company expects revenue growth in the range of 0-1 percent for the full year. The guidance is almost in line with the consensus forecast for a 0.8 percent increase.

4. Cigna Corporation (NYSE: CI)

Number of Hedge Fund Holders: 53

Leading health insurer Cigna recently announced better-than-expected financial results for the second quarter. The company reported earnings of $4.25 per share for the three months ended June 30, compared to $4.73 per share in the same period last year. Excluding certain items, the adjusted earnings of $5.24 per share were above the consensus forecast of $4.96 per share.

Revenue increased 10 percent on a year-over-year basis to $43.13 billion, ahead of analysts’ average estimate of $28.53 billion. Pharmacy revenue in the quarter jumped over 13 percent to $30.05 billion, beating the estimates of $28.53 billion. If we look at Cigna’s consumer base, pharmacy customers rose 5 percent to 101.93 million.

Commenting on the quarter, CEO David Cordani said, “Our more than 70,000 employees continue rising to the moment, delivering for our customers, patients, and clients during a period of ongoing uncertainty around the world. Our second quarter results were solid, as we continue to drive our business forward and invest to fuel our sustained long-term growth.”

Cigna also raised its sales outlook for 2021. It expects to report a minimum revenue of $170 billion for the full year, compared to its earlier forecast of at least $166 billion.

3. Datadog, Inc. (NASDAQ: DDOG)

Number of Hedge Fund Holders: 44

Datadog has grown from a small startup in 2010 to a leading software company with a market value of over $40 billion. The company recently delivered impressive results for the second quarter. Its adjusted of 9 cents per share crushed analysts’ average estimate of 3 cents per share.

Moreover, revenue for the quarter climbed 67 percent on a year-over-year basis to $235.5 million, exceeding the consensus forecast of $212.5 million. One of the main drivers behind robust sales growth was a strong surge in big customers.

CEO Olivier Pomel said in a statement, “Our high growth at scale demonstrates that we continue to be a trusted partner in our customers’ digital transformation and cloud migration journeys. We continue to expand the features and functionality of our cloud native end-to-end observability platform. Meanwhile, we are just getting started on our journey to break down silos between DevOps and Security teams with our Cloud Security Platform.”

Datadog also updated its financial guidance for FY 2021. It expects adjusted earnings in the range of 26-28 cents per share for the full year, well above its previous forecast of 13 cents-16 cents per share. Revenue is expected to come between $938-$944 million, compared to its earlier outlook between $880-$890 million.

2. Zillow Group, Inc. (NASDAQ: Z)

Number of Hedge Fund Holders: 82

Online real estate marketplace company Zillow recently announced its second-quarter results above expectations. It reported adjusted earnings of 44 cents per share for the second quarter ended June 30. In comparison, the company had reported a loss of 17 cents per share in the year-ago quarter when it was struggling due to the negative effects of Covid-19 on its business.

Revenue for the quarter increased to $1.31 billion, well above $768 million in the comparable period of 2020. The results easily surpassed the consensus forecast of 24 cents per share for adjusted earnings and $1.28 billion for revenue.

Praising Q2 results, CEO Rich Barton said, “Zillow is making rapid and significant progress toward building a seamless, integrated real estate experience for our customers and partners. Our strong second-quarter results show how well we’re executing on the three- to five-year growth objectives we announced in 2019.”

Looking forward, Zillow expects to report revenue in the range of $1.93 billion to $2.05 billion for the third quarter. The Q3 outlook is well ahead of $1.45 billion projected by analysts.

RiverPark Funds, in its Q1 2021 investor letter, mentioned Zillow Group, Inc. (NASDAQ: Z). Here is what the fund said:

“With its number one ranking in real estate brand awareness, and more than 200 million monthly unique users and 10 billion visits last year to its mobile apps and websites, Zillow is the leader in online real estate. The company has historically focused on the $20 billion real estate advertising market through its IMT segment but is now also targeting the more than $2 trillion home transaction and related services market in its Homes and Mortgages segments. Just as the internet disrupted travel bookings, job search, home movie viewing, and car purchasing, among other industries, Zillow is disrupting residential real estate by radically simplifying real estate transactions, including inspections, appraisals, title, insurance, mortgages, and buying and selling. Zillow co-founder and CEO Rich Barton has deep experience in disrupting industries, having founded Expedia and co-founding Glassdoor (Rich is also on the board of Netflix).

Zillow’s growing, high margin, high cash flow media business (its IMT segment generated $556 billion of EBITDA on $1.5 billion of revenue last year) is funding the explosive growth of its Homes and Mortgages sector, which has grown from zero in 2017 to $1.9 billion revenue last year. The two businesses work synergistically to provide Zillow with scale and data advantages, as well as low customer acquisition costs. We believe the company’s IMT segment will continue its high-margin, double-digit growth (last year IMT revenue and EBITDA grew 33% and 83%, respectively) and its Homes and Mortgages segment growth will accelerate post-COVID, with margins turning from negative to positive as the business scales.”

1. ViacomCBS Inc. (NASDAQ: VIAC)

Number of Hedge Fund Holders: 89

Strong streaming revenue and solid year-over-year growth in subscriptions drove ViacomCBS’ financial results for the second quarter. The mass media and entertainment company reported earnings of $1.50 per share, well above 83 cents per share in the same period last year. On an adjusted basis, the company earned 97 cents per share, just ahead of the consensus forecast of 96 cents per share.

Revenue came in at $6.564 billion, compared to $6.075 billion in the year-ago quarter. Analysts, on average, were looking for $6.488 billion. If we look at the performance of key segments, ads revenue jumped 24 percent on a year-over-year basis amid exclusive broadcasts of several sporting events during the quarter.

Moreover, affiliate revenue increased 9 percent, mainly due to expanded distribution. In comparison, streaming revenue skyrocketed 92 percent on a year-over-year basis, fueled by robust growth in advertising revenue across ViacomCBS’ digital video platforms.

Speaking on the results, CEO Bob Bakish said, “In a quarter of strong business performance, including growth in advertising and affiliate, streaming was a standout. We continued to accelerate our global streaming momentum and delivered phenomenal results across our flagship streaming services. For the second consecutive quarter, Paramount+ fueled more than 6 million additions to our global streaming subscription base, which now reaches over 42 million. This growth was driven by the power of the service’s differentiated content strategy and expanding content slate. Looking ahead, we’re excited about our opportunity to build on this momentum, as we scale Paramount+’s content offerings across genres and expand our reach with global audiences.”

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