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Prior to an earnings season, every investor looks for stocks that can beat market expectations. This is because investors always try to position themselves ahead of time and look to tap into stocks that are of high quality.
In this regard, we ran a screener that yielded Norwegian Cruise Line Holdings Ltd., Eli Lilly, The Progressive and Fortinet as the likely winners on the earnings beat potential.
Why Is a Positive Earnings Surprise Important?
Historically, stocks of companies with solid quarterly earnings (on a nominal basis) tank if they miss or merely meet market expectations. After all, a 20% earnings rise (though apparently looks good) does not tell you if earnings growth has been exhibiting a decelerating trend.
Also, seasonal fluctuations come into play sometimes. If a company’s first quarter is seasonally weak and its fourth quarter is strong, then it is likely to report a sequential earnings decline. In such cases, growth rates are misleading while judging the true health of a company.
Then again, after much brainstorming and analysis of companies’ financials and initiatives, Wall Street analysts project earnings of companies. They, in fact, club their insights and a company’s guidance when deriving an earnings estimate.
Thus, outperforming that estimate is almost equivalent to beating the company’s expectations and the market perception. And if the margin of earnings surprise is big, it typically drives the stock right after the release. Thus, more than anything else, an earnings surprise can push up a stock.
How to Find Stocks That Can Beat?
Now, finding stocks that have the potential to beat on the bottom line may be investors’ dream but not an easy job. One way to do this is to look at the earnings surprise history of the company.
An impressive track in this regard generally acts as a catalyst in sending a stock higher. It indicates the company’s ability to surpass estimates. Investors generally believe that the company will apply the same secret sauce to execute yet another earning beat in its next release.
A handful of criteria have narrowed down the universe from more than 7,700 stocks to only 13.
The average earnings surprise of NCLH for the past four quarters is 5.67%.
Eli Lilly: It is one of the world’s largest pharmaceutical companies. LLY boasts a diversified product profile, including a solid lineup of new successful drugs. The companycurrently has a Zacks Rank #2.
The average earnings surprise of LLY for the past four quarters is 69.07%.
The Progressive: The Zacks Rank #2 company is a leading independent agency writer of private passenger auto coverage, and the market share leader for motorcycle products since 1998.
The average earnings surprise of PGR for the past four quarters is 24.08%.
Fortinet: The company’s solutions are designed to integrate multiple levels of security protection, including firewall, virtual private networking, antivirus, intrusion prevention, web filtering, anti-spam and wide area network acceleration. The stock has a Zacks Rank #2 at present.
The average earnings surprise of FTNT for the past four quarters is 20.40%.
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.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include Norwegian Cruise Line, Eli Lilly, The Progressive and Fortinet
For Immediate Release
Chicago, IL – August 27, 2024 – Stocks in this week’s article are Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) , Eli Lilly (LLY - Free Report) , The Progressive (PGR - Free Report) and Fortinet (FTNT - Free Report) .
4 Top-Ranked Stocks to Play Likely Earnings Beats
Prior to an earnings season, every investor looks for stocks that can beat market expectations. This is because investors always try to position themselves ahead of time and look to tap into stocks that are of high quality.
In this regard, we ran a screener that yielded Norwegian Cruise Line Holdings Ltd., Eli Lilly, The Progressive and Fortinet as the likely winners on the earnings beat potential.
Why Is a Positive Earnings Surprise Important?
Historically, stocks of companies with solid quarterly earnings (on a nominal basis) tank if they miss or merely meet market expectations. After all, a 20% earnings rise (though apparently looks good) does not tell you if earnings growth has been exhibiting a decelerating trend.
Also, seasonal fluctuations come into play sometimes. If a company’s first quarter is seasonally weak and its fourth quarter is strong, then it is likely to report a sequential earnings decline. In such cases, growth rates are misleading while judging the true health of a company.
Then again, after much brainstorming and analysis of companies’ financials and initiatives, Wall Street analysts project earnings of companies. They, in fact, club their insights and a company’s guidance when deriving an earnings estimate.
Thus, outperforming that estimate is almost equivalent to beating the company’s expectations and the market perception. And if the margin of earnings surprise is big, it typically drives the stock right after the release. Thus, more than anything else, an earnings surprise can push up a stock.
How to Find Stocks That Can Beat?
Now, finding stocks that have the potential to beat on the bottom line may be investors’ dream but not an easy job. One way to do this is to look at the earnings surprise history of the company.
An impressive track in this regard generally acts as a catalyst in sending a stock higher. It indicates the company’s ability to surpass estimates. Investors generally believe that the company will apply the same secret sauce to execute yet another earning beat in its next release.
A handful of criteria have narrowed down the universe from more than 7,700 stocks to only 13.
Here are four out of those 13 stocks:
Norwegian Cruise Line: The Bermuda-based company, with a Zacks Rank #2 at present, is a leading cruise line operator. You can see the complete list of today’s Zacks #1 Rank stocks here.
The average earnings surprise of NCLH for the past four quarters is 5.67%.
Eli Lilly: It is one of the world’s largest pharmaceutical companies. LLY boasts a diversified product profile, including a solid lineup of new successful drugs. The companycurrently has a Zacks Rank #2.
The average earnings surprise of LLY for the past four quarters is 69.07%.
The Progressive: The Zacks Rank #2 company is a leading independent agency writer of private passenger auto coverage, and the market share leader for motorcycle products since 1998.
The average earnings surprise of PGR for the past four quarters is 24.08%.
Fortinet: The company’s solutions are designed to integrate multiple levels of security protection, including firewall, virtual private networking, antivirus, intrusion prevention, web filtering, anti-spam and wide area network acceleration. The stock has a Zacks Rank #2 at present.
The average earnings surprise of FTNT for the past four quarters is 20.40%.
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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2327252/buy-4-top-ranked-stocks-to-play-likely-earnings-beat
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.