Five Companies Having a ‘Spookily’ Good Year

By Anna Farley

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This Halloween, it’s time to take a look at the top five firms raking in profits this year –delivering a much-needed treat instead of a trick.

It’s been a scary year for most of us, with the Delta variant prolonging the COVID-19 pandemic, and even forcing some back into lockdowns.

But it’s not all doom and gloom, with some companies turning out a spookily high profit under tough conditions.

This Halloween, it’s time to take a look at the top five firms beating expectations and raking in profits this year –delivering a much-needed treat instead of a trick.

Let’s take a look at these surprise success stories…

Goldman Sachs

New York-based multinational investment bank and financial services firm Goldman Sachs (NYSE: GS) has to be on this top five list.

The company posted spectacular Q3 results, with earnings per share (“EPS”) of $14.93, 47% ahead of consensus (according to Refinitiv) and 66% ahead of the previous year.

Revenues, meanwhile, came in at $13.6 billion. That’s 17% ahead of the consensus estimate and a 26% jump from on turnover in the third quarter of 2020.

This success comes despite all the hiccups following the firm’s decision to take control of its Chinese joint venture. Being lead underwriter for China’s Didi Global (NYSE: DIDI) dealt a blow to the bank’s operations in the country.

Things quickly went downhill after Didi, then one of the biggest ride-hailing apps on the planet, listed shares on the New York Stock Exchange. Didi raised an impressive $4.4 billion in late June.

Unfortunately, very soon after the listing, Chinese regulators revealed they were investigating Didi over suspicions of data privacy and national security violations and forced app stores in China to remove Didi.

The move from Chinese authorities came amid wider ongoing scrutiny around Chinese firms listed in the US, including e-commerce giant Alibaba (HKG: 9988 | NYSE: BABA).

The nation has imposed new rules requiring a data security review for companies with more than one million customers. Meanwhile, the US itself has also introduced more rules for Chinese company IPOs, adding yet more obstacles to these floats.

All this has made things tougher still for Goldman in China. Nonetheless, the company is pushing forward and soundly beating analyst predictions.

The bank’s valuation reflects its success, too, with shares up 54% year-to-date.

Walgreens Boots Alliance

Another company surprising analysts this year is drugstore chain Walgreens Boots Alliance(NASDAQ: WBA).

The company’s financial Q4 earnings came in at $1.17 per share. That’s 15% higher than consensus estimates from Refinitiv and a 30% increase from the previous year. Meanwhile, revenue was 3% ahead of consensus at $34.3 billion, and 12% higher than in Q4 2020.

What pushed the company ahead of analyst forecasts was COVID-19 vaccine demand, which surged as many employers – including McDonald’s (NYSE: MCD) and United Airlines (NASDAQ: UAL) – imposed vaccine mandates.

As a result of all these mandates, the company delivered almost double the number of vaccines it had expected to in its fourth quarter – 13.5 million versus a predicted 7 million.

Given only 57% of the US population is fully vaccinated, compared to 74% in Canada, 75% in mainland China, and 68% in the UK, the unexpectedly high number of vaccinations is encouraging for Walgreens.

With booster shots on the way and the US likely to approve COVID vaccine for 5- to 11-year-olds soon, the months ahead look strong as well. No wonder, then, that Walgreens shares are up 17% in the year so far.

Munich Re

Fortune 500 German reinsurer Munich Re is performing unexpectedly well in 2021, managing to overcome substantial COVID-related expenses.

EPS came to €7.89 for its second financial quarter. Then figure is 34% ahead of company-compiled consensus and 91% ahead of last year’s €3.75. Gross written premiums for Q2 totaled €14.6 billion, up 11% from consensus and a 24% jump from the prior year.

Munich Re’s success comes even though pandemic losses have been worse than anticipated, dealing a €140 million blow to the company’s Q2 results.

Expenses relating to COVID-19 in the US came from mortality cover expenses, though Q2 did see a downward trend. India and South Africa were also sources of material losses for the firm in the quarter.

Year to date, the firm’s shares are up 5%, approaching pre-pandemic levels. The company dropped by almost 40% as lockdowns began back in 2020, but has made a major recovery since then.

PepsiCo

Food and beverage firm PepsiCo (NASDAQ: PEP) is a surprising success story in 2021, battling supply chain woes and higher costs to surpass expectations.

The company’s $1.79 Q3 EPS figure was 3% ahead of consensus from Refinitiv, with an 8% rise year-on-year. Meanwhile, at $20.2 billion, revenue was 4% ahead of consensus and a 12% jump from the year before.

Chair and CEO Ramon Laguarta said the company “delivered very strong net revenue growth while carefully navigating a dynamic and volatile supply chain and cost environment” in the quarter.

With such success in its third quarter, the company forecasts an annual organic revenue rise of around 8%. It also expects an 11% jump in core constant currency EPS for 2021 as a whole.

Shares in PepsiCo are up 12% for 2021 so far, overcoming a drop of around 10% from January to March.

Google

A stand-out even among overachievers in 2021 is Google parent and tech conglomerate Alphabet (NASDAQ: GOOGL | NASDAQ: GOOG).

While yes, analysts had predicted that figures to rise, they were completely caught off guard by the company’s $27.26 Q2 EPS. That’s a startling 41% higher than the Refinitiv consensus estimate of $19.34 per share, while being more than two and a half times the prior year’s $10.13 EPS.

The firm’s revenue for the quarter, $61.9 billion, was 10% ahead of consensus. It also marked a 62% jump from the same quarter of 2020, which suffered amid lockdowns and pandemic fears.

The company did take a hit in 2020 from COVID-19, its first year of revenue decline for the Ads business. However, the strength of Alphabet’s recovery still came as a shock.

Google CEO Sundar Pichai pointed to the “rising tide of online consumer and business activity” in Q2 as the source of its unexpected success.

High-profile tech stocks are especially appealing to investors in the wake of the pandemic. Uncertainty has pushed investors towards companies they see as better-prepared to weather COVID’s storms. Year-to-date, the company’s C shares are up 65% while A shares are up 64%.

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Industries:
Consumer Discretionary
Information Technology
Communication Services

Author: Anna Farley

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Anna Farley does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Anna Farley has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.