Chicago, IL – October 1, 2018 - Stocks in this week’s article include: Illumina Inc. ILMN, Weight Watchers International Inc WTW, Inogen Inc. INGN, Caterpillar Inc. CAT and QUALCOMM Inc. QCOM.
Screen of the Week of Zacks Investment Research:
Looking for an Earnings Beat? Play These Top 5 Stocks
Investors specifically look for stocks that have the ability to beat market expectations before an earnings season. This is because investors always try to place themselves ahead of time and look to bet on 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) fall 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 at times. If a company’s Q1 is seasonally weak and Q4 strong, it is likely to report a sequential earnings decline. In such cases, growth rates are misleading while judging the true health of a company.
On the other hand, 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 arriving at an earnings estimate.
Thus, outperforming that estimate is almost equivalent to beating the company’s own as well as market’s expectations. And if the margin of earnings surprise is big, it typically drives the stock 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 is 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, sending the stock higher. It indicates the company’s ability to surpass estimates. And investors usually believe that the company will apply the same secret formula to beat earning in its next release as well.
And that's what we're screening for today…
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/325336/looking-for-earnings-beat-play-these-top-5-stocks
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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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
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