SPECIAL REPORT The Top 7 Stocks for 2024

3 Q3 Earnings Smashers That Wall Street Just Shrugged At

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  • Wager on these stocks delivering earnings beats but faced flak from Wall Street.
  • Alphabet (GOOG, GOOGL): With a striking $76.7 billion Q3 revenue and YouTube’s ad revenue hitting $7.95 billion, Alphabet shines.
  • Abercrombie & Fitch (ANF):  Outperforming with $1.06 billion in revenue, ANF stands as a trendy pick in retail investment.
  • Norwegian Cruise Line (NCLH): NCLH sails ahead with a 56.8% revenue surge to $2.54 billion and a robust 106% occupancy rate.
earnings beats - 3 Q3 Earnings Smashers That Wall Street Just Shrugged At

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In the unforgiving stock market realm, earnings beats are like double-edged swords. Investors typically show little tolerance for subpar quarterly performances. Companies falling short of earnings and revenue forecasts typically face retribution.

However, even to those who surpass expectations, the landscape isn’t much kinder. As we’ll explore, even stellar performers aren’t immune to market volatility. They, too, can face harsh reactions post-earnings beats.

This paradoxical scenario underscores the complexity and unpredictability of today’s financial markets, offering little to long-term investors. This dynamic environment presents a daunting challenge for investors. It compels them to navigate effectively through the tumultuous waters of corporate earnings.

Alphabet (GOOG,GOOGL)

Alphabet Inc. (GOOG, GOOGL) and Google logos seen displayed on a smartphone
Source: IgorGolovniov / Shutterstock.com

Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has established itself as a true giant through Google Search, cloud services, and generative AI.

The strategic move has paid off, with the firm’s third quarter revenue hitting an impressive $76.7 billion. The figures speak for themselves, resulting in a 22% increase in Google Cloud revenue and an 11% rise in Search revenue year over year (YOY). However, the real star has been YouTube, with ad revenue soaring to $7.95 billion, primarily due to generative AI integration.

Despite a brief dip in stock value post-Q3 announcements, Alphabet’s prospects remain remarkably bright. Moreover, with its continued investment in generative AI across all business segments, Alphabet efficiently leverages its whopping data capabilities. With an attractive price-earnings ratio of 26 times, Alphabet stands out as a prudent choice for investors eyeing growth in the AI sphere.

Abercrombie & Fitch (ANF)

Abercrombie & Fitch (ANF) location with doors open)
Source: Jonathan Weiss / Shutterstock.com

Abercrombie & Fitch (NYSE:ANF) is a prominent apparel retailer based in New Albany, Ohio. Recently, it shared its third quarter financial results, coming in ahead of expectations across key metrics.

Despite a robust performance, the company’s stock experienced an 8% dip in price. Additionally, in a detailed financial breakdown, Abercrombie & Fitch reported a notable non-GAAP EPS of $1.83, exceeding estimates by 76 cents. Also, the company’s revenue climbed to $1.06 billion. That marks a significant 20.4% YOY bump while surpassing expectations by $77.6 million.

Furthermore, Abercrombie & Fitch has revised its net sales growth projection for 2023 to 12% to 14%, up from the previous estimate of 10%. This adjustment comes on the heels of earning $3.7 billion in 2022. Additionally, the company’s operating margin is now expected to be around 10%. That marks a stark improvement from the previously forecasted range of 8% to 9%. Also, with its stock trading at an attractive 5.7 times trailing twelve-month cash flows, Abercrombie & Fitch emerges as a compelling long-term investment opportunity.

Norwegian Cruise Line (NCLH)

Norwegian Pearl, a Norwegian Cruise Line (NCLH) ship, in the middle of the ocean
Source: Vytautas Kielaitis/shutterstock.com

Norwegian Cruise Line (NYSE:NCLH) presents an enticing opportunity for long-term investors, trading at an appealing three times forward cash flow.

The company’s third quarter performance reinforces its attractiveness, showcasing a robust financial standing. Moreover, it reported a non-GAAP EPS of 76 cents, exceeding estimates by eight cents. Furthermore, its revenue reached $2.54 billion, a massive 56.8% increase YOY, blowing past expectations by $30 million.

Norwegian Cruise Line demonstrates resilience and efficiency, essential qualities for long-term growth in a challenging industry. Notably, the firm achieved an impressive occupancy rate of 106% in the quarter, in line with its market forecasts. This performance underpins Norwegian’s projection of a full-year 2023 adjusted EBITDA of approximately $1.86 billion.

Despite external challenges, including the Maui wildfires and tensions in Israel, NCLH’s ability to navigate rough waters reaffirms its position as a desirable stock. Post announcement of these encouraging earnings results, NCLH stock is down 3.7%, suggesting a potential upside for those looking to invest.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.


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