Zacks.com Featured Highlights Include: Lexicon, Medtronic And NetApp
Zacks Investment Research | Mar 07, 2019 10:15PM ET
For Immediate Release
Chicago, IL – March 8, 2019 - Stocks in this week’s article are Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) , Medtronic plc (NYSE:MDT) and NetApp, Inc. (NASDAQ:NTAP) .
3 Stocks that Flaunt Solid Earnings Acceleration
Take a company’s revenues over a given period of time, subtract the cost of production and you will have its earnings! Right from the top brass to research analysts, earnings growth captivates all. This is because earnings are a measure of the money a company is making. Upbeat earnings results are more often than not followed by an uptick in the share price.
But earnings acceleration works even better in boosting the stock price. Studies have shown that majority of successful stocks see acceleration in earnings before a positive stock price movement.
Future Outperformers
So, what is earnings acceleration? It is the incremental growth in a company’s earnings per share (EPS). In other words, if the rate of a company’s quarter-over-quarter earnings growth increases within a stipulated frame of time, it can be called earnings acceleration.
In case of earnings growth, you pay for something that is already reflected in the stock price. But, earnings acceleration helps spot stocks that haven’t caught the attention of investors yet, which once secured will invariably lead to a rally in the share price. This is because earnings acceleration considers both direction and magnitude of growth rates.
Increasing percentage of earnings growth means that the company is fundamentally sound and has been on the right track for a considerable period of time. On the other hand, a sideways percentage of earnings growth indicates a period of consolidation or slowdown, while a decelerating percentage of earnings growth may at times drag prices down.
Hence, earnings acceleration should be viewed as a key metric for share price outperformance.
For the rest of this Screen of the Week article please visit Zacks.com at: Zacks Investment Research
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