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Earnings serve as a major indicator of a company’s profitability. This is the reason why, from top brass of any organization to research analysts, everyone is fascinated with earnings. Take a company’s revenue over a given period of time, subtract the cost of production and, there it is, you have earnings!
Better-than-expected earnings more often than not lead to an increase in the share price. However, in addition to actual earnings, expectations of earnings play a significant role in influencing the share price.
Earnings Estimates & Stock Prices
On many occasions, companies have seen their share prices decline even after reporting earnings growth or for that matter a stock price surging following an earnings decline. This happens because of missing or beating estimates.
So, what are earnings estimates? It includes analysts’ opinions of factors such as sales growth, product demand, competitive industry environment, profit margins, expenses and cost control. Earnings estimates also help an analyst use cash flow analysis to determine the fair value of a firm.
Thus, earnings estimates are a valuable tool for investors when deciding whether or not to buy a stock. It is imperative for an investor zeroing down to buy stocks with solid earnings growth to also make sure that their earnings estimates are on the rise.
Screening Parameters
In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we added the following parameters:
Zacks Rank less than or equal to 2: Only Zacks' 'Buys' and 'Strong Buys' are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off. You can seethe complete list of today’s Zacks #1 Rank stocks here.
5-Year Historical EPS Growth (%) greater than X-Industry: Stocks that possess strong EPS growth history.
% Change EPS F(0)/F(-1) greater than or equal to 5: Companies that witnessed year-over-year earnings growth rate of 5% or more in the last reported fiscal.
% Change Q1 Estimates over the last 4 weeks greater than zero: Stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks.
% Change F1 Estimates over the last 1 week greater than zero: Stocks that have seen their annual earnings estimates revised higher in the last 1 week.
% Change F1 Estimates over the last 4 weeks greater than zero: Stocks that have seen their annual earnings estimates revised higher in the last 4 weeks.
The above criteria narrowed down the universe of over 7,685 stocks to only 4. Here are the stocks:
Burlington Stores, Inc. (BURL - Free Report) operates as a retailer of branded apparel products in the United States. The company’s estimated earnings growth rate for this year stands at 29.1%.
Five Below, Inc. (FIVE - Free Report) is a specialty value retailer in the United States. The company’s estimated earnings growth rate for this year is pegged at 25.1%.
ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) operates as a specialty retailer in the United States. The company’s estimated earnings growth rate for this year stands at 24.9%.
Apollo Commercial Real Estate Finance, Inc. (ARI - Free Report) is a real estate investment trust. The company’s estimated earnings growth rate for this year is 5.2%.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
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4 Top Stocks with Impressive Earnings Growth
Earnings serve as a major indicator of a company’s profitability. This is the reason why, from top brass of any organization to research analysts, everyone is fascinated with earnings. Take a company’s revenue over a given period of time, subtract the cost of production and, there it is, you have earnings!
Better-than-expected earnings more often than not lead to an increase in the share price. However, in addition to actual earnings, expectations of earnings play a significant role in influencing the share price.
Earnings Estimates & Stock Prices
On many occasions, companies have seen their share prices decline even after reporting earnings growth or for that matter a stock price surging following an earnings decline. This happens because of missing or beating estimates.
So, what are earnings estimates? It includes analysts’ opinions of factors such as sales growth, product demand, competitive industry environment, profit margins, expenses and cost control. Earnings estimates also help an analyst use cash flow analysis to determine the fair value of a firm.
Thus, earnings estimates are a valuable tool for investors when deciding whether or not to buy a stock. It is imperative for an investor zeroing down to buy stocks with solid earnings growth to also make sure that their earnings estimates are on the rise.
Screening Parameters
In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we added the following parameters:
Zacks Rank less than or equal to 2: Only Zacks' 'Buys' and 'Strong Buys' are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off. You can see the complete list of today’s Zacks #1 Rank stocks here.
5-Year Historical EPS Growth (%) greater than X-Industry: Stocks that possess strong EPS growth history.
% Change EPS F(0)/F(-1) greater than or equal to 5: Companies that witnessed year-over-year earnings growth rate of 5% or more in the last reported fiscal.
% Change Q1 Estimates over the last 4 weeks greater than zero: Stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks.
% Change F1 Estimates over the last 1 week greater than zero: Stocks that have seen their annual earnings estimates revised higher in the last 1 week.
% Change F1 Estimates over the last 4 weeks greater than zero: Stocks that have seen their annual earnings estimates revised higher in the last 4 weeks.
The above criteria narrowed down the universe of over 7,685 stocks to only 4. Here are the stocks:
Burlington Stores, Inc. (BURL - Free Report) operates as a retailer of branded apparel products in the United States. The company’s estimated earnings growth rate for this year stands at 29.1%.
Five Below, Inc. (FIVE - Free Report) is a specialty value retailer in the United States. The company’s estimated earnings growth rate for this year is pegged at 25.1%.
ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) operates as a specialty retailer in the United States. The company’s estimated earnings growth rate for this year stands at 24.9%.
Apollo Commercial Real Estate Finance, Inc. (ARI - Free Report) is a real estate investment trust. The company’s estimated earnings growth rate for this year is 5.2%.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »