Morningstar
RecommendedThe Trade War and Tariffs - Full Coverage Arrow RightMorningstar Investment Conference UK 2025 - Full Coverage Arrow Right
Equity Research & Insights

10 Undervalued Stocks That Crushed Q1 Earnings

ASML, Hess, and Celanese are among the names that are still cheap despite impressive earnings beats.

Bella Albrecht 23 May, 2025 | 8:46AM
Facebook Twitter LinkedIn
Font-Size

Image of ASML logo

Amid an unusual earnings season, as a number of companies have withdrawn their 2025 guidance due to economic uncertainty, many are still managing to beat expectations. Combining the results of firms in the Morningstar US Market Index that have reported earnings with analyst expectations for those still yet to publish, earnings are on track to grow 11.5% from the fourth quarter of 2024—slightly below last quarter’s 16.8% growth, but still the second-highest rate in over three years.

At the same time, nearly half of the US-listed stocks covered by Morningstar that reported earnings as of May 16 beat FactSet consensus estimates by 5% or more. Even better for investors looking to put their money to work, analysts believe some of these stocks remain undervalued.

To highlight these opportunities, we ran a screen for undervalued stocks that crushed expectations for earnings and revenue for the quarter. More details on our screen and comments on the stocks from Morningstar analysts can be found later in this article.

10 Undervalued Earnings Crushers

  • Celanese CE
  • Koninklijke Philips PHG
  • Brunswick BC
  • Fanuc FANUY
  • ASML ASML
  • Hasbro HAS
  • Mattel MAT
  • Hayward HAYW
  • Hess HES
  • Essential Utilities WTRG

How Do First-Quarter Earnings Stack Up?

At the time of writing, 85% of the 852 US-listed stocks covered by Morningstar analysts have reported earnings. Of those, 47% beat the FactSet mean estimates for their earnings by 5% or more, a slight downtick from the 48% last quarter. About 13% missed earnings estimates by 5% or more, compared with the 17% last quarter and the lowest rate in over a year. More companies also reported in line with expectations—41% versus 37% last quarter.

How We Did Our Stock Screen

While Morningstar analysts pay close attention to earnings, they focus on long-term results and valuations. One quarter doesn’t usually lead to a change in a stock’s fair value estimate unless new material information affects the assumptions behind that valuation. For example, new data on a drug could raise the probability of its approval, or pricing gains on a key product line could affect an analyst’s long-term thinking. Still, looking at quarterly earnings with valuations in mind can help long-term investors identify opportunities.

We screened for stocks that beat earnings expectations by 10% or more but remain undervalued. To help keep the focus on companies with truly strong results that did not beat expectations through accounting gimmicks or one-time factors, we also screened for revenue beats of 5% or higher. We filtered those results for stocks with economic moats and a Morningstar Rating of 4 or 5 stars.

Of the 727 US-listed stocks covered by Morningstar analysts that have reported earnings so far, ten companies met the criteria. We’ve highlighted what our analysts had to say about their earnings.

Celanese

  • Earnings Per Share: Gain of $0.57 versus the consensus estimate of $0.38
  • Revenue: $2.4 billion versus the consensus estimate of $2.3 billion
  • Morningstar Rating: ★★★★★
  • Discount to Fair Value: 51%

“Celanese reported a profit decline due to lower prices and volumes. Celanese shares were up 8% at the time of writing as management guided to second-quarter results to come in above consensus estimates.

“We reduce our fair value estimate for narrow-moat Celanese to $110 from $120. The reduction is driven by our outlook for a broader economic slowdown that will weigh on volumes and a lower Brent oil/natural gas spread, which will reduce unit profits. We also raise our Morningstar Uncertainty Rating to Very High from High. The rating change is driven by our view that chemicals producers can see a wider range of outcomes due to tariff-related uncertainty and Celanese’s high debt levels and more cyclical end markets.”

—Seth Goldstein, strategist

Read Goldstein’s full take on Celanese here.

Koninklijke Philips


“Philips saw a 1% decline in sales in the first quarter of 2025, slightly ahead the company-compiled consensus estimates. The company maintained its full-year sales growth guidance but lowered adjusted EBITA due to phasing in US-China tariffs. The share price dipped 2% at market open on May 6.

“We maintain our EUR 35 fair value estimate and wide moat rating. At current levels, shares look undervalued. We think solid company fundamentals, long overshadowed by litigation and now by tariffs, have led investors to take a wait-and-see approach. Our long-term expectations remain intact for a rebound in sales growth and improvement of operating margins, with both supporting superior investor returns above our estimated cost of capital.”

—Alex Morozov, director

The rest of Morozov’s take on Philips can be found here.

Brunswick


“Brunswick’s first-quarter sales declined 11% to $1.2 billion, as revenue in propulsion tumbled 16% and boat fell 13%. With an improvement in near-term demand unlikely, the firm reduced its 2025 sales outlook by $200 million (to $5 billion-$5.2 billion) and its EPS forecast by $1 (to $2.50-$4.00).

“The marine industry is facing another year of potential sales declines, and Brunswick’s businesses haven’t been immune. Even still, the firm could potentially deliver $350 million in free cash flow, depending on where tariffs and consumer sentiment ultimately land. We don’t expect the boating industry to remain lethargic perpetually, and so plan no change to our longer-term prognosis, which includes average sales growth of 4% and low-teen operating margins. Propulsion is the most promising segment in our model, rising 5% over time.”

—Jaime Katz, senior equity analyst

Katz has more about Brunswick stock here.

Fanuc


“Wide-moat Fanuc’s March-quarter sales were JPY 212 billion, up 7.6% year on year and 6.7% sequentially. This exceeded our expectation of JPY 205 billion with robust sales in the robot and robomachine segments, which grew 10% and 25% sequentially, respectively. However, this was partially offset by the disappointing sales in the FA segment, which declined 1.3% sequentially. Based on the mixed results, we believe the FA and robot segments will recover more moderately than we had expected, as many companies will take a wait-and-see approach amid the uncertainty fueled by the US tariffs issue.

“Fanuc shares have dropped roughly 14% since Trump’s ‘liberation day’ announcements on April 2, reflecting the market’s concern about the near-term investment cooldown caused by the drastic changes in the global trade map. However, we believe Fanuc is well-positioned, despite the potential prolonged hikes in tariffs, as it will benefit from the increasing demand for automation products with the implementation of the US manufacturing enhancement plan in the long run.”

—Kangyuxiao Li, equity analyst

Investors can find more of Li’s take on Fanuc here.

ASML


“In a highly uncertain environment, investors are trying to figure out if global tariffs will generate a global recession and how deep it could be. ASML reconfirmed its EUR 30 billion to EUR 35 billion revenue guidance for 2025, but investors are already starting to look at 2026. We model EUR 33 billion and EUR 37 billion in sales in 2025 and 2026, respectively. To realize EUR 37 billion revenue in 2026, we estimate ASML needs an average of EUR 6 billion in system orders per quarter during the next three quarters, which we see as achievable.

“ASML is now trading at 24 and 19 times our EPS estimates for 2025 and 2026, respectively, in line with other weak macroeconomic periods like October 2022 and March 2020. We believe this is an attractive entry point for a firm we expect will grow earnings in the midteens during the next decade.”

—Javier Correonero, equity analyst

Correonero has more about ASML stock here.

Hasbro


“Hasbro’s first-quarter sales jumped 17%, helped by a 46% increase in its Wizards of the Coast and digital gaming segments. The higher margin mix of sales led adjusted operating margin to expand 550 basis points to 25.1%, a first-quarter high-water mark for the firm.

“Despite increasing consumer hesitancy reported across numerous discretionary spending companies, Hasbro’s results stand out as resilient, thanks to consumers and retailers acting rationally thus far. Well-demanded brands should aid Hasbro in taking market share ahead.”

—Jaime Katz

Take a deeper dive into Katz’s outlook for Hasbro.

Mattel


“Mattel’s brands continue to resonate with consumers, leading to sales growth of 2%, to $827 million in first quarter. Despite minimal top-line growth and a shift in Easter out of the period, adjusted EPS improved by 2 cents, to a $0.03 loss, as cost savings helped capture profitability gains.

“We think Mattel’s share underperformance (down 8% year-to-date) versus the Morningstar Global Markets Index (up 2%) stems from concern about the volume of sourcing from China (40%), but the firm expects its $270 million in incremental tariffs to be fully mitigated. Although Mattel isn’t pruning back brand investments, it is protecting profits through its $200 million Optimizing for Growth effort, tactical pricing, and continued supply chain diversification. Recall, that around 45% of Mattel’s sales are international, and not affected by tariffs.”

—Jaime Katz

Read Katz’s full take on Mattel here.

Hayward Holdings


“Narrow-moat-rated Hayward started the year with a solid first quarter, delivering a 25% year-over-year increase in adjusted EPS to $0.10. We’ve maintained our $17 per share fair value estimate, as time value of money offset our slightly more conservative near-term volume growth projections. We see the name as slightly undervalued, with shares currently trading in 4-star territory.

“Despite tariff-related uncertainty, management maintained its 2025 outlook and continues to anticipate full-year net sale growth of 1%-5% and adjusted EBITDA of $280 million-$290 million, though the guidance now reflects higher pricing and lower volumes due to tariffs. Hayward’s manufacturing footprint is concentrated in North America, with roughly 85% of North America sales produced in the region. At current tariff levels, management estimates that tariffs would increase annualized costs by $85 million, but the company aims to limit the full-year 2025 impact to $30 million thanks to various mitigation measures. These will include incremental price increases, managing channel inventory levels, cost reductions, and reducing reliance on direct sourcing from China from 10% to 3% by the end of the year.”

—KrzysztofSmalec, equity analyst

Investors can find more of Smalec’s take on Hayward here.

Hess


“Hess’ first-quarter result revealed a sequential decline in total production of 4% to 476 mboe/d. While cash unit costs fell greater than daily production, the stock fell 3%, despite both metrics beating guidance.

“This is Hess’ first report since US President Trump unveiled his April 2025 tariff plan and OPEC+ announced it will materially increase daily crude production. Lower oil prices can influence exploration and production firms to scale down production, which inevitably affects unit costs. While Hess’ production, cash unit costs, and capital expenditure all compared favorably with prior guidance, we were already anticipating beats in production and cash unit costs. More importantly, both the production and cash unit cost guides disappointed, but lower capex will moderate these impacts.”

—Joshua Aguilar, director

Take a deeper dive into Aguilar’s outlook for Hess.

Essential Utilities


“Essential Utilities reported earning $1.03 per share in the first quarter, up 6% from $0.97 in the first quarter of 2024. Essential is on track to reach our full-year estimates and management’s $2.07-$2.11 EPS guidance.

“Essential closed one water acquisition during the quarter and did not add any pending acquisitions to its pipeline, which is now $63.5 million, excluding the stalled $276.5 million Delcora deal. We assume little near-term earnings contribution from water acquisitions. Management reaffirmed its $450 million estimate of PFAS-related capital investment to achieve federal standards by 2028. Essential has received $100 million from lawsuits and has secured or is pursuing $69 million of low-interest loans and grants in Pennsylvania.”

—Travis Miller, strategist

Read Miller’s full take on Essential here.


The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn
Font-Size

About Author

Bella Albrecht  is associate data journalist at Morningstar

© Copyright 2025 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures

The Morningstar Star Rating for Stocks is assigned based on an analyst's estimate of a stocks fair value. It is projection/opinion and not a statement of fact. Morningstar assigns star ratings based on an analyst’s estimate of a stock's fair value. Four components drive the Star Rating: (1) our assessment of the firm’s economic moat, (2) our estimate of the stock’s fair value, (3) our uncertainty around that fair value estimate and (4) the current market price. This process culminates in a single-point star rating that is updated daily. A 5-star represents a belief that the stock is a good value at its current price; a 1-star stock isn't. If our base-case assumptions are true the market price will converge on our fair value estimate over time, generally within three years. Investments in securities are subject to market and other risks. Past performance of a security may or may not be sustained in future and is no indication of future performance. For detail information about the Morningstar Star Rating for Stocks, please visit here

Quantitative Fair Value Estimate represents Morningstar’s estimate of the per share dollar amount that a company’s equity is worth today. The Quantitative Fair Value Estimate is based on a statistical model derived from the Fair Value Estimate Morningstar’s equity analysts assign to companies which includes a financial forecast of the company. The Quantitative Fair Value Estimate is calculated daily. It is a projection/opinion and not a statement of fact. Investments in securities are subject to market and other risks. Past performance of a security may or may not be sustained in future and is no indication of future performance. For detail information about the Quantiative Fair Value Estimate, please visit here

The Morningstar Medalist Rating is the summary expression of Morningstar’s forward-looking analysis of investment strategies as offered via specific vehicles using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. The Medalist Ratings indicate which investments Morningstar believes are likely to outperform a relevant index or peer group average on a risk-adjusted basis over time. Investment products are evaluated on three key pillars (People, Parent, and Process) which, when coupled with a fee assessment, forms the basis for Morningstar’s conviction in those products’ investment merits and determines the Medalist Rating they’re assigned. Pillar ratings take the form of Low, Below Average, Average, Above Average, and High. Pillars may be evaluated via an analyst’s qualitative assessment (either directly to a vehicle the analyst covers or indirectly when the pillar ratings of a covered vehicle are mapped to a related uncovered vehicle) or using algorithmic techniques. Vehicles are sorted by their expected performance into rating groups defined by their Morningstar Category and their active or passive status. When analysts directly cover a vehicle, they assign the three pillar ratings based on their qualitative assessment, subject to the oversight of the Analyst Rating Committee, and monitor and reevaluate them at least every 14 months. When the vehicles are covered either indirectly by analysts or by algorithm, the ratings are assigned monthly. For more detailed information about these ratings, including their methodology, please go to here

The Morningstar Medalist Ratings are not statements of fact, nor are they credit or risk ratings. The Morningstar Medalist Rating (i) should not be used as the sole basis in evaluating an investment product, (ii) involves unknown risks and uncertainties which may cause expectations not to occur or to differ significantly from what was expected, (iii) are not guaranteed to be based on complete or accurate assumptions or models when determined algorithmically, (iv) involve the risk that the return target will not be met due to such things as unforeseen changes in changes in management, technology, economic development, interest rate development, operating and/or material costs, competitive pressure, supervisory law, exchange rate, tax rates, exchange rate changes, and/or changes in political and social conditions, and (v) should not be considered an offer or solicitation to buy or sell the investment product. A change in the fundamental factors underlying the Morningstar Medalist Rating can mean that the rating is subsequently no longer accurate.

For information on the historical Morningstar Medalist Rating for any managed investment Morningstar covers, please contact your local Morningstar office.

For more detailed information about conflicts of interest, including EU MAR disclosures, please see the “Morningstar Medalist Rating Analyst Conflict of Interest & Other Disclosures for EMEA”here

Select Your Site Edition To make sure the site is relevant to you, we need to know if you’re an individual investor or a financial professional.