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Why the Earnings Streak Will Continue for SM Energy (SM)

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Looking for a stock that might be in a good position to beat earnings at its next report? Consider SM Energy Company (SM - Free Report) , a firm in the Oil & Gas - US Exploration & Production, which could be a great candidate for another beat.

This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, SM has beaten estimates by at least 35% in both cases, suggesting it has a nice short-term history of crushing expectations.

Earnings in Focus

Two quarters ago, SM expected to post a loss of 69 cents per share, while it actually produced a loss of 44 cents per share, a beat of 36.2%. Meanwhile, for the most recent quarter, the company looked to deliver a loss of 63 cents per share, when it actually posted a loss of 37 cents per share, representing 41.3% positive surprise.

SM ENERGY CO Price and EPS Surprise

 

Thanks in part to this history, recent estimates have been moving higher for SM Energy. In fact, the Earnings ESP for SM is positive, which is a great sign of a coming beat.

After all, the Zacks Earnings ESP compares the most accurate estimate to the broad consensus, looking to find stocks that have seen big revisions as of late, suggesting that analysts have recently become more bullish on the company’s earnings prospects. This is the case for SM, as the firm currently has a Zacks Earnings ESP of 2.38%, so another beat could be around the corner.

This is particularly true when you consider that SM has a great Zacks Rank #2 (Buy) which can be a harbinger of outperformance and a signal for a strong earnings profile. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

When you add this solid Zacks Rank to a positive Earnings ESP, a positive earnings surprise happens nearly 70% of the time, so it seems pretty likely that SM could see another beat at its next report, especially if recent trends are any guide.

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