These 10 Stocks Are Likely To Beat 'Rock-Bottom' Q1 Expectations

In a recent report, analysts at Bank of America laid out their expectations for Q1 earnings season. Analysts see extremely low consensus expectations for the quarter setting the stage for a “modest beat” overall. The report includes a list of companies Bank of America analysts believe are most likely to beat earnings expectations.

Low Expectations

Consensus S&P 500 Q1 bottom-up earnings per share estimates have fallen by 8 percent in the past three months to $27.05. Analysts note that expectations leading up to this quarter’s earnings season have fallen more than expectations prior to any other quarter since 2012.

In addition, Q1 is the first quarter since 2009 in which analysts predict a year-over-year decline in overall earnings for the S&P 500.

Analysts are calling for a 4.0 percent year-over-year overall decline in earnings in Q1, but predict that positive earnings growth trends will resume by the second half of the year.

Factors

The two biggest factors weighing on the U.S. economy in the first quarter were slumping oil prices and a strong dollar. Q1 earnings expectations for the energy sector have fallen about 50 percent over the past three months.

Stocks with high foreign sales numbers have also seen a 13 percent reduction in Q1 earnings estimates in the past three months due to increasing forex headwinds.

Potential Beats

Bank of America analysts believe that the “rock-bottom expectations” could be a positive for stocks going into earnings season. With expectations so low, it might be quite difficult for companies to disappoint investors.

Bank of America lists the following stocks among those most likely to beat earnings expectations in Q1:

• Priceline Group Inc PCLN
• Twenty-First Century Fox Inc Class A FOXA
• The Coca-Cola Co KO
• Phillips 66 PSX
• UnitedHealth Group Inc. UNH
• Lockheed Martin Corporation LMT
• Intuit Inc INTU
• Apple Inc. AAPL
• Eastman Chemical Company EMN
• Edison International EIX