By Ian Salisbury

Which companies are most likely to beat Wall Street profit forecasts? Investors can get a big clue by looking at recent changes to a key metric: the price-to-earnings ratios.

When it comes to picking stocks, conventional wisdom holds that low price-to-earnings ratios are an advantage. They suggest the shares have room to rise once Wall Street comes to fully appreciate a company's earnings power.

In a report Thursday, Trivariate Research took issue with this notion, arguing that investors should pay less attention to the level of a stock's P/E ratio and focus more on whether that level was rising or falling.

Stocks whose P/Es had increased recently often delivered better-than-expected earnings, while stocks whose ratios had fallen tended to miss.

"Companies that get more expensive -- no matter what their starting valuation level -- are far more likely to subsequently get upward revisions than companies that just saw lower multiples over the last quarter," wrote founder Adam Parker.

Which stocks fit the bill today? To answer that question, Trivariate looked for stocks set to report earnings in coming days that have seen P/Es rise recently and have beaten Wall Street earnings-per-share estimates for the last three quarters.

The list includes a number of giants including Eli Lilly, Exxon Mobil, and defense firm RTX Corp.

Exxon, which Barron's recently picked as a potential winner in 2026 , recently updated its five-year corporate plan to call for 13% compound annual earnings growth, up from 10%. The oil major, which has seen its forward P/E surge to 19 from 14 in the past 12 months, is scheduled to announce fourth-quarter earnings on Jan. 30. Analysts expect earnings of $1.70 a share for the period, up 1.8% from a year earlier.

Trivariate's list also includes plenty of smaller names, with hot growth prospects like Lumentum Holdings, L3Harris Technologies, and Bloom Energy.

Optics company Lumentum has seen its P/E climb to 45 from 36 in the past year, thanks to artificial-intelligence-related demand for its lasers. Lumentum is set to report fiscal-second-quarter earnings on Feb. 3. Analysts expect a profit of $1.41 a share, up more than 200% from a year earlier.

Bloom Energy, which makes solid oxide fuel cells, is another AI picks-and-shovels play. The stock got a big boost earlier this month when American Electric Power said it would exercise an option to buy $2.65 billion worth of fuel cells to build a new power plant as part of a deal with an unnamed third party.

Bloom's fuel, which can be installed next to data centers in a matter of months, provide an attractive, cost-effective option for tech giants that don't want to spend years wrangling with a local utility for a traditional power hookup. The company's forward P/E has nearly doubled to 121 from 63 in the past year.

Bloom, set to release fourth-quarter earnings on Feb. 5, is expected to post a profit of 31 cents a share, down around 28% from the previous year, thanks to higher spending. Revenue is forecast to rise 13% to $649 million.

Write to Ian Salisbury at ian.salisbury@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 25, 2026 03:00 ET (08:00 GMT)

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