Small and Mid-Cap stocks likely to beat/miss this earnings season - BofA

After small caps’ biggest four-day rally since 2020, two things can help sustain the Russell 2000 (NYSEARCA:IWM) outperformance, according to BofA Securities analysts.

• First, continued evidence of easing inflation to support the start of the Fed cutting cycle.
• And second, confidence in small cap fundamentals, with a projected earnings recovery for later in the year.

The Russell 2000 (IWM) still looks cheap compared to large caps, even after the rally, but compared to history it looks expensive, analysts said. Focus could now shift to fundamentals with the kickoff of the second quarter earnings.

EPS revisions remain the weakest for small caps, with the percentage of EPS and sales beats very flat at 17% so far, compared to 29% for large caps. “Lack of improvement could suggest a pause in outperformance, but if we see better guidance/revisions, the rally likely continues,” wrote Analyst Jill Carey Hall.

The following are small- and mid-cap stocks that could beat and miss earnings, based on buy/underperform-rated ratings on both EPS and sales, according to BofA analysts.

Positive surprise stocks:

• Group 1 Automotive Inc. (GPI) - Expected report date: July 24
• Skechers U.S.A. Inc. Class A (SKX) - Expected report date: July 25
• Crocs Inc. (CROX) - Expected report date: Aug. 1
• Strategic Education Inc. (STRA) - Expected report date: July 31
• Service Corporation International (SCI) - Expected report date: Aug. 1
• Dick’s Sporting Goods Inc. (DKS) - Expected report date: Aug. 22
• Toll Brothers Inc. (TOL) - Expected report date: Aug. 22
• Permian Resources Corporation Class A (PR) - Expected report date: Aug. 6
• NMI Holdings Inc. (NMIH) - Expected report date: July 30
• Trupanion Inc. (TRUP) - Expected report date: Aug. 2
• Omnicell Inc. (OMCL) - Expected report date: Aug. 1
• Kirby Corp. (KEX) - Expected report date: Aug. 1
• Triumph Group Inc. (TGI) - Expected report date: Aug. 2
• ESAB Corp. (ESAB) - Expected report date: Aug. 2
• BWX Technologies Inc. (BWXT) - Expected report date: Aug. 5
• Trex Company Inc. (TREX) - Expected report date: Aug. 6
• Aspen Technology Inc. (AZPN) - Expected report date: Aug. 6
• AptarGroup Inc. (ATR) - Expected report date: July 25

Negative surprise stocks:

• Lumen Technologies Inc. (LUMN) - Expected report date: Aug. 6
• Kohl’s Corp. (KSS) - Expected report date: Aug. 23
• Texas Capital Bancshares Inc. (TCBI) - Expected report date: July 18
• Hertz Global Holdings Inc. (HTZ) - Expected report date: Aug. 1