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As we enter the Q4 reporting cycle, looking for stocks having unswerving earnings growth is the highest priority for astute investors. And why not? If the company doesn’t make money, it won’t last over the long haul. Consider a company’s revenues over a given period of time, subtract the cost of production and you have earnings.
This metric is also considered the most noteworthy variable in influencing the share price. But, expectations of earnings also play a significant role in influencing the price of a stock.
Earnings Estimates Determine Share Prices
We have often seen a decline in the stock price despite earnings growth and a rally in the price following an earnings decline. This is largely a result of a company’s earnings failing to meet market expectations.
Earnings estimates embody analysts’ opinion on factors such as sales growth, product demand, competitive industry environment, profit margins and cost control. Thus, earnings estimates serve as a valuable tool while making investment decisions. Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.
Investors, thus, should be on the lookout for stocks that are ready to make a big move. Hence, it is important for investors to buy stocks that have historical earnings growth and are also seeing a rise in quarterly and annual earnings estimates.
Screening Parameters:
In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we added the following parameters:
Zacks Rank equal to 1 (Only Zacks' '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 around 7,886 stocks to only 32. Here are the top five stocks:
Darden Restaurants, Inc. (DRI - Free Report) , through its subsidiaries, owns and operates full-service restaurants in the United States and Canada. The company’s estimated growth rate for this year is 15.9%, higher than the industry’s increase of 1.2%. The Zacks Consensus Estimate for its current-year earnings increased 5.2% in the last 60 days.
D.R. Horton, Inc. (DHI - Free Report) operates as a homebuilding company in East, Midwest, Southeast, South Central, Southwest, and West America. The company’s estimated growth rate for this year is 25.6%, higher than the industry’s increase of 15.3%. The Zacks Consensus Estimate for its current-year earnings increased 7.5% in the last 60 days.
Five Below, Inc. (FIVE - Free Report) operates as a specialty value retailer in the United States. The company’s estimated growth rate for this year is 38.5%, higher than the industry’s increase of 8.2%. The Zacks Consensus Estimate for its current-year earnings increased 8.4% in the last 60 days.
KB Home (KBH - Free Report) operates as a homebuilding company in the United States. The company’s estimated growth rate for this year is 28.1%, higher than the industry’s increase of 15.3%. The Zacks Consensus Estimate for its current-year earnings increased 9.2% in the last 60 days.
BlackRock, Inc. (BLK - Free Report) is a publicly owned investment manager. The company’s estimated growth rate for this year is 22.6%, higher than the industry’s increase of 12.2%. The Zacks Consensus Estimate for its current-year earnings increased 9.6% in the last 60 days.
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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5 Best-Ranked Earnings Growth Stocks to Buy Now
As we enter the Q4 reporting cycle, looking for stocks having unswerving earnings growth is the highest priority for astute investors. And why not? If the company doesn’t make money, it won’t last over the long haul. Consider a company’s revenues over a given period of time, subtract the cost of production and you have earnings.
This metric is also considered the most noteworthy variable in influencing the share price. But, expectations of earnings also play a significant role in influencing the price of a stock.
Earnings Estimates Determine Share Prices
We have often seen a decline in the stock price despite earnings growth and a rally in the price following an earnings decline. This is largely a result of a company’s earnings failing to meet market expectations.
Earnings estimates embody analysts’ opinion on factors such as sales growth, product demand, competitive industry environment, profit margins and cost control. Thus, earnings estimates serve as a valuable tool while making investment decisions. Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.
Investors, thus, should be on the lookout for stocks that are ready to make a big move. Hence, it is important for investors to buy stocks that have historical earnings growth and are also seeing a rise in quarterly and annual earnings estimates.
Screening Parameters:
In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we added the following parameters:
Zacks Rank equal to 1 (Only Zacks' '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 around 7,886 stocks to only 32. Here are the top five stocks:
Darden Restaurants, Inc. (DRI - Free Report) , through its subsidiaries, owns and operates full-service restaurants in the United States and Canada. The company’s estimated growth rate for this year is 15.9%, higher than the industry’s increase of 1.2%. The Zacks Consensus Estimate for its current-year earnings increased 5.2% in the last 60 days.
D.R. Horton, Inc. (DHI - Free Report) operates as a homebuilding company in East, Midwest, Southeast, South Central, Southwest, and West America. The company’s estimated growth rate for this year is 25.6%, higher than the industry’s increase of 15.3%. The Zacks Consensus Estimate for its current-year earnings increased 7.5% in the last 60 days.
Five Below, Inc. (FIVE - Free Report) operates as a specialty value retailer in the United States. The company’s estimated growth rate for this year is 38.5%, higher than the industry’s increase of 8.2%. The Zacks Consensus Estimate for its current-year earnings increased 8.4% in the last 60 days.
KB Home (KBH - Free Report) operates as a homebuilding company in the United States. The company’s estimated growth rate for this year is 28.1%, higher than the industry’s increase of 15.3%. The Zacks Consensus Estimate for its current-year earnings increased 9.2% in the last 60 days.
BlackRock, Inc. (BLK - Free Report) is a publicly owned investment manager. The company’s estimated growth rate for this year is 22.6%, higher than the industry’s increase of 12.2%. The Zacks Consensus Estimate for its current-year earnings increased 9.6% in the last 60 days.
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 »