With Q3 earnings season all but over, investors can rejoice in the gains that were reported during the quarter. Earnings and revenue came in higher than a year earlier with future estimates expected to build on this success. For the fourth quarter, FactSet estimates earnings growth of S&P 500 companies to touch 3.3% with revenue growth hovering around 5%. This would mark the first time the index posted consecutive quarters of growth in about 2 years. So far a handful of companies look like they’ll shine next quarter but none more than Tesla Motors Inc (NASDAQ:TSLA), NVIDIA Corporation (NASDAQ:NVDA) and Netflix, Inc. (NASDAQ:NFLX). According to the Estimize data this group of companies are exhibiting the telltale signs of an earnings beat: heavy upward revisions activity, strong history of topping analysts estimates, and consist year over year growth.
Tesla Motors Inc
Tesla surprised pretty much everyone last quarter after not only delivering a profit for the first time ever but one as large as 71 cents per share. Revenue made equally impressive strides, growing by 85% on a record number of car deliveries and production. With the Model 3 set to be released in Spring 2017, Tesla should see a new and quite possibly the biggest layer of support to the top line. Even if this holiday quarter might not be as robust as Q3, Tesla appears to be heading in the right direction. The Estimize community still believes the electric car maker can turn a profit of 25 cents per share for the fourth quarter which is over 200% higher than Wall Street’s estimate at the moment. Revenue estimates for the period have dropped 5% in the past 3 months to $2.31 billion, reflecting a 39% increase from a year earlier.
Nvidia posted one of the largest percentage beats this earnings season amongst all the companies in the S&P 500, so it seems fitting to find them on a list of potential Q4 winners. Earnings for the third quarter topped analysts estimates by over 50% while sales trumped those very same expectations by 18%. Management credited strong growth on the continued success of its core GPU business and significant progress made in VR, self driving cars and data center computers. NVidia has left very little reason to believe that any of these businesses will take a step back in future quarters. The biggest concern might be analysts’ and investors’ unreasonably high expectations given recent gains. Nevertheless analysts continue to ramp up forward estimates to unprecedented levels. For the fourth quarter, the Estimize consensus data edged significantly higher to 88 cents per share on $2.07 billion in revenue.
If not for NVidia, analysts would be touting Netflix as one of the best Q3 earnings plays. The video streaming service pulled out quite the surprise in the third quarter, beating analysts expectations on both the top and bottom line. Most of the gains came from a blow out subscription number which gained 370,000 net members in the U.S. and 3.2 million internationally, handily beating the 2.3 million management forecasted. Netflix steady stream of original content and new initiatives like an offline option will continue to provide support to the top line. But the cost of rolling out new content will put pressure on the bottom line. Revisions activity following the report unsurprisingly edged higher for the fourth quarter. The Estimize community is now looking for earnings of 14 cents per share on $2.47 billion in revenue, reflecting a 74% increase on the bottom line and 34% on the top.