Top three stocks on the S&P 500 last week

It was another rough week for the S&P 500 as the benchmark fell 2.5%, marking the second straight down week for the index. It was a bit of a head scratcher as major companies like Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT) and Intel (NASDAQ: INTC) all posted great earnings reports last week.

With earnings from Apple (NASDAQ: AAPL) expected this week, among others, and the Federal Reserve meeting on interest rates, it should be an interesting week ahead.

According to an analysis by Reuters, about half of the S&P 500 companies have reported their third-quarter earnings already, and 79% of them have beaten consensus estimates. Yet, since hitting a 2023 high of 4,589 on July 31, the S&P 500 is down 10.3% to 4,117 as of the market close on Oct. 27. However, it remains up 7.2% year to date.

Last week's top three stocks all posted third-quarter earnings during the week. Additionally, all three companies were among those that beat consensus estimates.

1. Willis Towers Watson

Willis Towers Watson (NASDAQ:WTW) was the top performer on the S&P 500 last week, posting a one-week return of 11.2%. The stock was trading at $229 per share as of opening bell on Monday, down 6.4% year to date (YTD).

The global insurance broker and consultant based in London was fueled by excellent third-quarter earnings, soundly beating consensus revenue and earnings estimates. The company saw its revenue spike 11% year over year to $2.2 billion while its adjusted operating income grew 24% to $351 million. Willis Towers Watson's adjusted operating margin also climbed 170 basis points to 16.2%, while its adjusted earnings rose 2% to $2.24 per share.

Revenue from the company's Health, Wealth and Career segment increased 10% year over year to $1.3 billion, with its operating margin up 350 basis points to 23.8%. The other major segment, Risk and Broking, saw a 12% revenue increase and a 200-basis-point increase in its operating margin to 15.7%.

The full-year outlook calls for mid-single-digit organic revenue growth, adjusted operating margin expansion and $160 million of incremental run-rate savings.

2. Rollins

The second-best stock on the S&P 500 last week was Rollins (NYSE:ROL), the leading pest control company whose subsidiaries include Orkin and the newly acquired Fox Pest Control. Rollins’ stock surged 9.2% last week on earnings that topped estimates. The stock opened Monday’s trading at around $36 per share, down about 1% YTD.

Rollins posted record quarterly revenue of $840 million in the quarter, up 15% year over year. Meanwhile, its operating income climbed 22% to $177 million, while its operating margin was 21.1% -- a jump of 120 basis points. Overall, Rollins' net income rose 17% to $128 million, or 26 cents per diluted share.

"Organic growth remains healthy while we continue to be active on the acquisition front. The demand for our services is solid, and our pipeline for acquisitions is robust,” said Rollins President and CEO Jerry Gahlhoff, Jr.

The firm also bumped up its dividend in the quarter to 15 cents per share, up from 13 cents the previous quarter, at a yield of 1.66%.

3. RTX Corp.

Aerospace and defense giant RTX Corp. (NYSE:RTX), the company formerly known as Raytheon, was the third-best stock on the S&P 500 last week, with its share price climbing 9.1%. It opened this week at just over $79 per share, down roughly 21% YTD.

RTX rose mainly on a favorable outlook as opposed to particularly strong earnings. Sales were down 21% year over year in the quarter, mainly related to a previously disclosed defect related to the manufacturing of certain Pratt & Whitney engines from powdered metal contamination.

"We have made significant progress on our assessment of the Pratt & Whitney powder metal manufacturing matter and expect the financial impact to be in line with the previously disclosed charge," RTX Chairman and CEO Greg Hayes said in the earnings report.

That defect led to a net loss of 68 cents per share in the quarter, reflecting a charge of $1.53 per share from the Pratt powder metal matter and 40 cents per share of acquisition accounting adjustments. However, RTX's adjusted sales were up 12% year over year to $19 billion, while its adjusted earnings rose 3% to $1.25 per share.

Investors were more interested in the company's record $190 billion in backlog, however.

"The historic demand across our commercial aerospace and defense businesses drove 12% organic sales growth during the third quarter and led to another record backlog of $190 billion,” Hayes added.

Of the $190 billion, $115 billion is from commercial aerospace, and $75 billion is from defense.

The company also raised its full-year sales guidance for 2023 to around $68.5 billion, up from a range of $67.5 billion to $68.5 billion. RTX also boosted its adjusted sales projection to around $74 billion, up from a range of $73 billion to $74 billion, and its adjusted EPS guidance rises to a range of $4.98 to $5.02, up from the previous range of $4.95 to $5.05. RTX's guidance for free cash flow roses to about $4.8 billion, up from the previous estimate of $4.3 billion.

The company also approved $10 billion worth of share repurchases, boosting its post-merger buyback commitment to between $36 billion and $37 billion through 2025, up from the prior range of $33 billion to $35 billion.