Zacks.com Featured Highlights Include: Take-Two, Molina, Wright Medical, CommVault And WNS
Zacks Investment Research | Feb 11, 2019 09:19PM ET
For Immediate Release
Chicago, IL – February 12, 2019 - Stocks in this week’s article are Take-Two Interactive Software Inc. (NASDAQ:TTWO) , Molina Healthcare Inc (NYSE:MOH) , Wright Medical Group N.V. (NASDAQ:WMGI) , CommVault Systems Inc. (NASDAQ:CVLT) and WNS (Holdings) Limited (NYSE:WNS) .
Tap Potential Earnings Beats with 5 Top Stock Picks
It is not surprising that before an earnings season, every investor looks for stocks that can beat market expectation. This is because investors always try to position themselves ahead of time and look to tap stocks that are high-quality in nature.
Why Is a Positive Earnings Surprise So 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) doesn’t tell you if earnings growth has been exhibiting a decelerating trend.
Also, seasonal fluctuations come into play sometimes. If a company’s Q1 is seasonally weak and Q4 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.
Meanwhile, 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 own expectation as well as the market perception. And if the margin of earnings surprise is big, it typically drives the stock higher right after the release. Thus, more than anything else, an earnings surprise can push a stock higher.
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. And investors generally believe that the company will apply the same secret sauce to execute yet another earning beat in its next release.
For the rest of this Screen of the Week article please visit Zacks.com at: Zacks Investment Research
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