In a week packed with quarterly results from big tech firms, several top-rated Zacks stocks across various sectors have stood out.
Stronger-than-expected Q4 earnings have shattered the notion that these stocks are undervalued, presenting an opportune moment for investment.
HCA Healthcare (HCA)
HCA Healthcare, representing the Zacks Medical sector, revealed robust Q4 earnings, with a bottom line figure of $5.90 per share, surpassing the Zacks Consensus of $5.05 per share by 17%. The company’s Q4 earnings climbed 27% year over year, accompanied by a sales increase to $17.3 billion, beating Q4 estimates of $16.55 billion by 4%.
As the largest non-governmental operator of acute care hospitals in the nation, HCA’s stock portrays promising indicators by holding a Zacks Rank #2 (Buy) and an overall “A” VGM Zacks Style Scores grade (for Value, Growth, and Momentum).
Moreover, HCA shares trade at a reasonable 15.4X forward earnings multiple and less than 2X sales. Despite the company’s consistent top and bottom line expansion, the stocks remain undervalued. Enhancing shareholder value, HCA has upped its quarterly dividend by 10% and unveiled an additional share repurchase program valued at up to $6 billion.
PulteGroup (PHM)
PulteGroup, a Zacks Construction sector stock, was added to the Zacks Rank #1 (Strong Buy) list after Q4 earnings of $3.28 per share topped estimates by 2%. Despite Q4 sales of $4.29 billion falling short of estimates at -4%, PulteGroup has exceeded earnings expectations for five consecutive quarters, with an average earnings surprise of 15% over the last four quarterly reports.
In the wake of the latest earnings beat, PulteGroup’s stock is deemed inexpensive, particularly considering its P/E valuation. Despite a 76% surge in the stock over the last year, it still trades at 9.2X forward earnings, significantly below the S&P 500’s 20.4X and even beneath its Zacks Building Products-Home Builders industry average of 10.3X.
Oshkosh (OSK)
Oshkosh, a specialty vehicle manufacturer in the auto sector, revealed Q4 EPS of $2.56 per share, comfortably surpassing estimates of $2.17 a share by 18% and escalating 60% from $1.60 per share a year ago. Although its quarterly sales of $2.46 billion recorded a slight miss on the top line, they rose 12% year over year.
The favorable quarterly results have made Oshkosh’s stock appear attractive, trading at 10.6X forward earnings which is notably below the benchmark and a 46% discount to its Zacks Automotive-Original Equipment industry average of 19.8X. Oshkosh has also outperformed earnings expectations in each of its last four quarterly reports, with an average earnings surprise of 47%.
Bottom Line
HCA Healthcare, PulteGroup, and Oshkosh have proven themselves as value stocks by surpassing their Q4 earnings expectations. With their attractive valuations, now is an opportune time to consider these stocks for long-term investment, as they are solid contenders in their respective industries for the coming years.
