Zacks.com Highlights: Crocs, Illumina, Twitter, Vocera Communications And Cardtronics
Zacks Investment Research | Nov 22, 2018 08:30PM ET
For Immediate Release
Chicago, IL – November 23, 2018 - Stocks in this week’s article include: Crocs Inc. (NASDAQ:CROX) , Illumina Inc. (NASDAQ:ILMN) , Twitter Inc. (NYSE:TWTR) , Vocera Communications Inc. (NYSE:VCRA) and Cardtronics Plc (NASDAQ:CATM) .
Screen of the Week of Zacks Investment Research:
Bet on 5 Stocks with Strong Earnings Beat Potential
Tapping stocks that come up with solid earnings is a common practice. But instead of picking them post earnings, investing in those that are like to beat market expectations may increase your gains manifolds.
Why Is Positive Earnings Surprise So Important?
Historically, stocks of companies with solid quarterly earnings (on a nominal basis) fall if they miss or just meet market expectations. After all, a 20% earnings rise (though it looks good apparently) doesn’t tell you if earnings growth has been exhibiting a decelerating trend. If that is the case, the company’s fundamentals are in question.
There is also the factor of seasonal fluctuation. If a company’s Q1 is seasonally weak and Q4 is strong, it is likely to report a sequential earnings decline. In such cases, growth rates are ambiguous while judging the company’s true health.
Meanwhile, Wall Street analysts study companies’ financials and initiatives to forecast earnings. They in fact club their insights and the company’s guidance to arrive at an earnings estimate. So, outperforming that estimate is almost equivalent to beating the company’s own expectation as well as market perception. And if the company manages to surpass earnings by a wide margin, it typically drives the stock higher right after the release.
How to Find Those Gems?
Since it is hard to predict if a company will beat or miss in the upcoming earnings season, investors can check its earnings surprise history. A notable track record generally acts as a tailwind. It revs up chances of beating estimates in the next release too as investors expect the company to use the same old trick to surpass expectations, or is smart enough to pull off a beat in the next release.
And that's what we're screening for today…
For the rest of this Screen of the Week article please visit Zacks.com at: Zacks Investment Research
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