Earnings season is all about the numbers; sales, beats, losses, and forecasts — the figures all adding up to determine the near-term future direction of the stocks at play.
The earnings season is a veritable festival of numbers; dozens of companies each day filing the previous three months’ performance figures and hoping the market reacts kindly to the presented data. Of course, on the Street, analysts are watching carefully, ready to vote with a Buy or Sell following positive or negative developments delivered during the earnings call.
With this in mind, we used TipRanks’ Earnings Calendar to get the lowdown on 3 Strong Buy tickers reporting quarterly results today after market close. We lined up the three alongside each other to get an idea of what the Street thinks is in store for the trio ahead of the print.
PTC Inc (PTC)
Industrial software maker PTC endured a difficult 2019. In contrast to the broader market’s upbeat performance, PTC’s share price shed almost 10% last year. The company encountered several headwinds which were reflected in disappointing quarterly reports; lower L&S (license and subscription) bookings and a bumpy transition to a subscription model among the factors driving the negative sentiment.
After 2019’s woes, Evercore’s Kenneth Talanian reminds investors that “underlying the noisy quarterly results was ARR growth at 12% y/y.”
PTC is at the forefront of the Internet of things (IoT) revolution. Its software offerings providing companies with the ability to connect physical devices with the digital realm, which in turn helps improve companies’ manufacturing capabilities.
The company has several high-profile partnerships in place, including ones with Microsoft and Ansys. PTC is also partnered with Rockwell Automation, which invested $1.04 billion in PTC, in what amounts to an 8.4% stake. According to Talanian, all partnerships “represent an opportunity for upside to numbers in F20 and beyond.”
The 5-star analyst expounded, “F20 represents an opportunity for improvement with a backdrop of large deal renewals, subscription conversion opportunities, and potential upside from key partnerships. With a new focus on ARR and FCF as key metrics there is some potential for quarterly noise, but we continue to believe there is more upside opportunity than downside risk at these levels.”
To this end, Talanian reiterated an Outperform rating on PTC, along with a price target of $104. The figure implies potential upside of a handsome 32% over the coming months. (To watch Talanian’s track record, click here)
Overall, most of the Street have not given up on the company just yet, as TipRanks analytics showcase PTC as a Strong Buy. Out of 6 analysts tracked in the last 3 months, 5 are bullish on the stock, while only one remains sidelined. With a potential upside of 8%, the stock’s consensus target price stands at $87. (See PTC’s price targets and analyst ratings on TipRanks)
Sterling Bancorp (STL)
Moving on from tech to the banking industry, we come across Sterling Bancorp, a regional bank holding company with a customer base mostly located in the New York metro and Hudson Valley areas. STL performed well last year, matching the S&P 500’s yearly 29% gains. Word on the Street is that Sterling’s earnings are expected to continue to grow in 2020.
The upcoming report will be the first to exhibit an impact from the acquisition of Santander Bank’s commercial loan portfolio. The purchase was completed in the start of December, and is expected to lead to higher average earning assets this year.
Piper Sandler’s Alexander Twerdahl expects the quarter to show “lower provision, lower expenses and seasonally stronger loan growth which will drive EPS higher.” The analyst matches the consensus estimate and expects STL to report 4Q19 EPS of $0.53.
Sterling has been focusing on cutting costs, which should have an effect on non-interest expenses in 2020. The company has also been focusing on reducing financial centers and after consolidating a further 10 branches in 3Q, expects to have less than 80 financial centers by the end of 2020 (currently 87).
Twerdahl further noted, “We expect expenses to fall 1.2% sequentially. With 3Q earnings, management maintained core operating expense guidance of $415 – $425 mil. In 3Q, core expenses hit our forecast, falling by 5.4%. Management has a good track record of hitting its expense guidance so this is the piece of the guidance in which we have the most faith… We are modeling for full year core operating expenses of $416 mil.”
Twerdahl, therefore, reiterated a Buy rating on Sterling along with a price target of $27. The figure suggests possible upside of nearly 30% from current levels. (To watch Twerdahl’s track record, click here)
Sterling, like PTC, receives 5 Buy ratings and a single Hold from the Street. Put together, these add up to a Strong Buy consensus rating and are accompanied by an average price target of $25.75, which indicates a potential upside of 25% over the next 12 months. (See Sterling Bancorp stock analysis on TipRanks)
QCR Holdings (QCRH)
Staying in the financial industry, the final company on our list is another bank holding company, the Illinois-based QCR Holdings. QCR is primarily a commercial bank and has branches in Iowa, Illinois and Missouri. The small-cap performed impressively in 2019, adding over 37% to its share price.
QCR recently finalized the sale of Rockford Bank & Trust to Illinois Bank & Trust, a subsidiary of Heartland Financial. Management explained the sale will benefit QCR shareholders as it will provide further capital to be used in more profitable markets, which should ultimately lead to further organic growth.
Piper Sandler’s Nathan Race has been keeping a tap on QCR and ahead of the company’s 4Q19 report has been making some adjustments. Race lowered his 4Q19 GAAP EPS estimates to $1.42 from $1.47 along with bringing down 2019 GAAP EPS estimates to $4.03 (from $4.08). According to the analyst, the reduced EPS is based on a lower than anticipated pretax gain tied to the divestiture of Rockford Bank & Trust to Heartland. On the other hand, Race increased his target price up to $49.
The analyst explained “Our price target moves to $49 (+$2) and is based on 13.0x (from 12.5x given higher peer multiples) our 2021E EPS of $3.77, which is largely consistent with peers as QCRH’s below average profitability profile on a ROA basis (PSCe = 1.14% in 2020 vs. peers of 1.28%) is balanced by its superior operating leverage outlook for this year.”
Unsurprisingly, then, Race reiterated an Overweight rating on QCR. Should the new target of $49 be met, investors will pocket a 17% gain over the next 12 months. (To watch Race’s track record, click here)
QCR’s Strong Buy consensus rating breaks down into 3 Buys and 1 Hold. The Street’s average price target comes in at $44.5 and represents upside potential of nearly 7%. (See QCR stock-price forecasts and analyst ratings on TipRanks)