20 S&P 500 companies that had the best Q1 on 3 key measures — should you buy the stocks?
By Philip van Doorn
These companies increased quarterly sales the most while also becoming more profitable
First-quarter earnings season is just about over for the S&P 500. Then again, with about 20% of the companies having fiscal quarters that don't match the calendar, it seems the flow of earnings reports never ends.
It might seem from media reports that the economy is always facing some sort of crisis, but you may be surprised that more than half of the S&P 500 companies increased quarterly sales from a year earlier. There are pockets of opportunity in any market environment.
Below is a screen of companies that showed three areas of improvement in their results for fiscal quarters ended Feb. 15 or later.
The three areas are:
Profit margins vary widely by industry. They are most useful when looking at their movement for individual companies.
In the following screen we are not looking at earnings per share, because so many one-time factors can affect profit numbers for any company any quarter, and even distort bottom-line results for a full year.
What about the Covid-19 distortion?
A screen based in part on comparisons of quarterly sales from a year earlier can still be confusing because of the near wipeout of sales for travel-related companies during the Covid-19 pandemic that started to slow the U.S. economy in the first quarter of 2020. Even though the most dire restrictions were lifted over a year ago, the cruise industry, hotel and casino operators and airlines were still in recovery mode, which would inflate the most recent year-over-year comparisons. If a company such as Norwegian Cruise Line Holdings Ltd. (NCLH) showed a 249% increase in first-quarter sales, of course its profit improved. A year earlier, the company's margins were negative.
So for this screen's first test, which was for year-over-year increases in quarterly sales, the numbers for the most recent quarter had to be be higher than they were four years earlier. That is, for a company whose fiscal quarter ended March 31, the sales number had to be greater than it was during the first quarter of 2019. It turns out that for Norwegian Cruise Line Holdings, first-quarter sales were up nearly 30% from four years earlier. So this company passed the first cut of the screen, while its competitor Carnival Corp. (CCL) didn't, because sales for its fiscal first quarter ended Feb. 28 were lower 5% than they were for the quarter ended Feb. 28, 2019.
The screen
Getting back to the S&P 500, 477 companies had announced results for fiscal quarters ended Feb. 15 or later, through May 22. Among these, gross and operating margin data was available for the most recent and year-earlier quarters from FactSet for 425 companies. The margins aren't available for most companies in the financial sector. The banking and insurance industries use different measures of profitability.
Among the 425 companies, there were 121 showing improved quarterly sales, gross margins and operating margins from a year earlier.
Among these 121 companies, 106 reported sales for the most current quarter that were higher from pre-Covid levels, as explained above.
Here are the 20 companies that passed the screen while showing the largest increases in quarterly sales from a year earlier:
Company Ticker Change in quarterly sales from year earlier Gross margin Gross margin -- year-earlier quarter Operating margin Operating margin -- year-earlier quarter
Norwegian Cruise Line Holdings Ltd. NCLH 249% 19.87% -76.65% 12.84% -96.20%
Royal Caribbean Group RCL 172% 25.67% -47.75% 22.01% -53.19%
Albemarle Corp. ALB 129% 49.40% 39.57% 46.38% 35.16%
VICI Properties Inc. VICI 111% 99.23% 98.55% 82.93% 74.87%
Enphase Energy Inc. ENPH 65% 44.02% 38.79% 25.47% 17.63%
United Airlines Holdings Inc. UAL 51% 3.27% -15.31% 5.48% -10.22%
First Solar Inc. FSLR 49% 19.92% 2.95% 18.89% 3.32%
SolarEdge Technologies Inc. SEDG 44% 31.82% 27.32% 16.74% 9.54%
Booking Holdings Inc. BKNG 40% 95.74% 94.43% 16.20% 13.36%
American Airlines Group Inc. AAL 37% 19.27% 0.57% 7.69% -12.07%
Delta Air Lines Inc. DAL 36% 11.91% -0.73% 2.25% -3.02%
Marriott International Inc. Class A MAR 34% 20.55% 18.46% 18.11% 15.22%
Fortinet Inc. FTNT 32% 75.24% 72.75% 23.75% 18.37%
Lamb Weston Holdings Inc. LW 31% 31.73% 23.14% 24.90% 18.89%
PACCAR Inc. PCAR 31% 20.88% 15.55% 20.01% 14.37%
Alaska Air Group Inc. ALK 31% 6.97% -4.40% 0.64% -10.83%
Deere & Co. DE 30% 38.29% 33.74% 28.29% 24.25%
Allegion Public Ltd. Co. ALLE 28% 42.71% 39.97% 22.38% 19.06%
Ceridian HCM Holding Inc. CDAY 26% 55.18% 51.21% 17.49% 7.50%
Rockwell Automation Inc. ROK 26% 40.65% 36.61% 21.32% 16.37%
Source: FactSet
Click on the tickers for more about each company.
Click here for Tomi Kilgore's detailed guide to the wealth of information for free on the MarketWatch quote page.
Here's the same list in the same order, with a summary of analysts' opinions of the sto
Company Ticker Share "buy" ratings Share neutral ratings Share "sell" ratings May 22 price Consensus price target Implied 12-month upside potential Forward P/E Norwegian Cruise Line Holdings Ltd. NCLH 42% 47% 11% $14.33 $16.20 13% 13.2 Royal Caribbean Group RCL 67% 33% 0% $80.33 $87.64 9% 14.7 Albemarle Corp. ALB 72% 21% 7% $206.50 $261.86 27% 9.1 VICI Properties Inc. VICI 95% 5% 0% $31.61 $37.63 19% 12.8 Enphase Energy Inc. ENPH 74% 23% 3% $164.65 $256.67 56% 26.2 United Airlines Holdings Inc. UAL 67% 28% 5% $47.41 $63.56 34% 4.8 First Solar Inc. FSLR 48% 41% 11% $201.69 $224.37 11% 21.3 SolarEdge Technologies Inc. SEDG 75% 25% 0% $298.87 $375.56 26% 26.6 Booking Holdings Inc. BKNG 58% 39% 3% $2,695.62 $2,871.46 7% 18.4 American Airlines Group Inc. AAL 24% 67% 9% $14.38 $18.19 26% 4.9
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