3 Outperformers During This Challenging Earnings Season

Investors were biting their fingernails as this earnings season began during an unprecedented economic shutdown. But now that it’s mostly over… it really wasn’t that bad! Or maybe it’s better to say: it wasn’t as bad as it could have been.

Now, it’s true that most of these quarters accounted for time before the closures began and many companies pulled their outlooks due to all the uncertainty. But we still saw an impressive amount of positive earnings surprises, which showed just how strong the economy was before all this craziness began.

And as importantly, analysts are comfortable in raising earnings estimates, especially since the country is slowly beginning to reopen with a recovery expected in the second half of the year.

In normal times, the EPS Growth, Revisions & Positive Surprises was always a good screen to look at after earnings season. And thanks to the resilience shown in the market of late… it still is!

This screen looks for Zacks Rank #1s (Strong Buys) with upward earnings estimate revisions and positive surprises that are poised to outperform. There are plenty of them, so go to the screen’s homepage for all the stocks that made the list. Below are three names that recently passed the criteria:

Dropbox (DBX - Free Report)

Shares of Dropbox (DBX - Free Report) have jumped more than 31% since the coronavirus low on March 23, which means this cloud storage firm is just a little bit higher than its IPO price of $21 from March 2018. While the first two years as a public company has been a bit bumpy, the last two months have shown just how vital a “smart workspace” can be in an unpredictable environment.

Perhaps that’s why DBX just reported its first quarter of GAAP profitability, with total revenue soaring 18% to $455 million. Paying users rose to 14.6 million from 13.2 million in the previous year.

On a non-GAAP basis, earnings per share of 17 cents topped the Zacks Consensus Estimate by more than 21%. That’s nine straight quarters with a positive surprise, which means it hasn’t missed since going public even though its share price is well off its highs.

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