NEW YORK (TheStreet) -- Which S&P 500 companies are poised to have the biggest revenue growth this year?
With first-quarter earnings reports just about wrapped up after several big retail chains issued results this week, S&P Capital IQ, a division of McGraw Hill Financial (MHFI), analyzed revenue estimates for companies with market capitalization of at least $20 billion to identify those most likely produce the largest year-over-year revenue growth in 2015. (The analysis excludes the REIT sub-industry as well as companies with growth driven by one-time items, such as acquisitions,it said.) The analysis is based on overall analysts' consensus 2015 revenue estimates as tallied by S&P Capital IQ.
The top 10 list is overwhelmingly weighted toward the health care sector, with seven companies in the biotech or pharmaceuticals industries.
"Acquisitions and new drug approvals continue stimulating both subsectors," the May 18 report said. "Notably, we only included companies that have consistently completed acquisitions as a normal course of business in this analysis (we excluded companies with large one-time acquisitions)."
Tech companies also dominate the list.
"Facebook Inc. (FB), Netflix Inc. (NFLX), and Salesforce.com Inc. (CRM) complete the revenue growth list, which isn't surprising considering the top-line momentum for all three of these companies," the report said.
Check out the companies that are expected to produce the largest revenue growth in 2015. We paired the companies with ratings from TheStreet Ratings. And when you're done, be sure to check out which companies are expected to have the biggest profit growth this year.
TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
Note: Year-to-date returns are based on May 19, 2015 closing prices.GILD data by YCharts
10. Gilead Sciences (GILD)
Market Cap: $163.3 billion
Year-to-date return: 17.3%
2015 Consensus Revenue Growth Estimate: 19.69%
S&P Capital IQ Rating/Price Target: Strong Buy/$143 PT
TheStreet Ratings: Buy, A
TheStreet Ratings said: "We rate GILEAD SCIENCES INC (GILD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GILD's very impressive revenue growth greatly exceeded the industry average of 19.9%. Since the same quarter one year prior, revenues leaped by 51.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 107.51% and other important driving factors, this stock has surged by 34.29% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GILD should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- GILEAD SCIENCES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GILEAD SCIENCES INC increased its bottom line by earning $7.38 versus $1.83 in the prior year. This year, the market expects an improvement in earnings ($10.70 versus $7.38).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 94.5% when compared to the same quarter one year prior, rising from $2,227.41 million to $4,333.00 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, GILEAD SCIENCES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: GILD Ratings Report