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It’s that time of the year again. Technically, earnings may just be quarterly released numbers but these numbers are of immense importance to the investor community and a key driver of stock price.
Expectations for Q2
Four back-to-back quarters of earnings didn’t actually give us any reason to cheer and we expect the gloomy trend to continue through Q2 as well.
However, considering that the magnitude of estimate revisions this quarter is less compared to the previous ones, we expect this quarter to mark a transition with the picture turning positive in Q3.
Headwinds
The global economy continues to be fragile as many investors are still apprehensive of the long-term effects of Brexit. Uncertainties related to the Fed’s decision to hike interest rates persist as the Brexit has diminished the possibility of it happening any time soon.
Oil prices dropped to two-month lows of around $45-a-barrel last Friday over indications of resurgence in shale drilling activities and signs of economic sluggishness in Asia. A stronger dollar – which makes the greenback-priced crude dearer for investors holding foreign currency – also provided headwinds.
Zacks to the Rescue
At Zacks, we have developed a system that beats the earnings estimate consensus more than 70% of the time. This system uses the Zacks Rank, along with what we call Expected Surprise Prediction, or ESP. A stock sporting a good Zacks Rank, as well as a positive Earnings ESP, has a very high chance of beating estimates in its next earnings report.
To make sure that our chosen stocks continue to grow past the earnings season, we have added a Growth Style Score of ‘A’ to our screen using our style score system. Our Growth Style Score condenses all the essential metrics from a company’s financial statements to achieve a true sense of the quality and sustainability of its growth.
We believe that in a highly volatile market scenario it is wiser to play safe and invest in growth stocks rather than in momentum or value ones. The increasing market volatility makes the momentum strategy highly risky, while value investing generally works best for longer-term investors.
However, investing in hot and flourishing companies whose earnings are expected to rise at an above-average rate relative to the market is the way to go in a tumultuous market.
The integration of our time-tested Zacks Rank and Earnings ESP methodology helps to zero in on stocks that have a good earnings beat history. In addition, these stocks have strong growth prospects compared to their peers.
Keep an Eye on These 5 Performers
Intel Corporation (INTC - Free Report) is one of the world’s leading semiconductor chip makers developing advanced integrated digital technology products, primarily integrated circuits, for industries such as computing and communications.
This Zacks Rank #2 (Buy) stock has an Earnings ESP of +5.66%. The Most Accurate Estimate for the company is currently pegged at 56 cents, ahead of the Zacks Consensus Estimate of 53 cents for the quarter.
The company boasts a top Growth Score and has registered a remarkable average quarterly beat of 11.5% with successive beats in the last four quarters.
With its impressive combination of a top Zacks Rank and positive earnings ESP, this company looks set to post another earnings beat on Jul 20.
Ryerson Holding Corporation (RYI - Free Report) is a leading processor and distributor of various forms of stainless steel, aluminum, carbon, alloy steel, nickel and red metals.
This Zacks Rank #2 stock has an Earnings ESP of +7.69%. The Most Accurate Estimate for the company is currently pegged at 42 cents, ahead of the Zacks Consensus Estimate, which is pegged at 39 cents for the upcoming quarter.
The company, boasting a top Growth Score, has beaten estimates in three out of the last four quarters, registering a whopping average four-quarter beat of 118.2%. Moreover, its estimate for 2016 earnings has climbed up from $1.16 per share to $1.25 per share over the past month.
With its impressive combination of a top Zacks Rank and a positive earnings ESP, this company looks set to continue with its winning streak in the to-be reported quarter, the results of which will be announced on Aug 10.
Trinseo SA (TSE - Free Report) is a global materials company and manufacturer of plastics, latex and rubber.
This Zacks Rank #1 (Strong Buy) stock has an Earnings ESP of +6.06%. The Most Accurate Estimate for the company is currently pegged at $1.75, ahead of the Zacks Consensus Estimate, which is pegged at $1.65 for the soon-to-be-reported quarter.
The company has registered an average quarterly beat of over 2% in the trailing four quarters. With its impressive combination of a top Zacks Rank and a positive earnings ESP, this company looks confident of posting an earnings beat on Aug 1.
Post Holdings, Inc. (POST - Free Report) is a manufacturer, marketer and distributor of branded ready-to-eat cereals in the United States and Canada.
This Zacks Rank #1 stock has an Earnings ESP of +12.77%. The Most Accurate Estimate for the company is currently 53 cents, ahead of the Zacks Consensus Estimate of 47 cents for the to-be reported quarter.
The company has posted an average beat of more than 345% in the trailing four quarters
With these time-tested elements in its favor, the company is likely to beat the consensus and post another huge surprise on Aug 8.
PGT, Inc. is one of the leading manufacturers and suppliers of residential impact-resistant windows and doors in the U.S.
This Zacks Rank #2 stock has an Earnings ESP of +13.33%. The Most Accurate Estimate for the company is currently pegged at 17 cents, higher than the Zacks Consensus Estimate of 15 cents for the soon-to-be-reported quarter.
The company has registered an average four-quarter beat of 1.66%. With its impressive combination of a top Zacks Rank and a positive earnings ESP, this company looks set to post another earnings beat on Aug 3.
Be a Winner
Like always, some stocks will skyrocket after the earnings are announced while others will fall off the cliff. Employing Zacks' ESP methodology helps you to track down the likely outperformers before they report.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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5 Growth Stocks to Watch This Earnings Season
It’s that time of the year again. Technically, earnings may just be quarterly released numbers but these numbers are of immense importance to the investor community and a key driver of stock price.
Expectations for Q2
Four back-to-back quarters of earnings didn’t actually give us any reason to cheer and we expect the gloomy trend to continue through Q2 as well.
However, considering that the magnitude of estimate revisions this quarter is less compared to the previous ones, we expect this quarter to mark a transition with the picture turning positive in Q3.
Headwinds
The global economy continues to be fragile as many investors are still apprehensive of the long-term effects of Brexit. Uncertainties related to the Fed’s decision to hike interest rates persist as the Brexit has diminished the possibility of it happening any time soon.
Oil prices dropped to two-month lows of around $45-a-barrel last Friday over indications of resurgence in shale drilling activities and signs of economic sluggishness in Asia. A stronger dollar – which makes the greenback-priced crude dearer for investors holding foreign currency – also provided headwinds.
Zacks to the Rescue
At Zacks, we have developed a system that beats the earnings estimate consensus more than 70% of the time. This system uses the Zacks Rank, along with what we call Expected Surprise Prediction, or ESP. A stock sporting a good Zacks Rank, as well as a positive Earnings ESP, has a very high chance of beating estimates in its next earnings report.
To make sure that our chosen stocks continue to grow past the earnings season, we have added a Growth Style Score of ‘A’ to our screen using our style score system. Our Growth Style Score condenses all the essential metrics from a company’s financial statements to achieve a true sense of the quality and sustainability of its growth.
We believe that in a highly volatile market scenario it is wiser to play safe and invest in growth stocks rather than in momentum or value ones. The increasing market volatility makes the momentum strategy highly risky, while value investing generally works best for longer-term investors.
However, investing in hot and flourishing companies whose earnings are expected to rise at an above-average rate relative to the market is the way to go in a tumultuous market.
The integration of our time-tested Zacks Rank and Earnings ESP methodology helps to zero in on stocks that have a good earnings beat history. In addition, these stocks have strong growth prospects compared to their peers.
Keep an Eye on These 5 Performers
Intel Corporation (INTC - Free Report) is one of the world’s leading semiconductor chip makers developing advanced integrated digital technology products, primarily integrated circuits, for industries such as computing and communications.
This Zacks Rank #2 (Buy) stock has an Earnings ESP of +5.66%. The Most Accurate Estimate for the company is currently pegged at 56 cents, ahead of the Zacks Consensus Estimate of 53 cents for the quarter.
The company boasts a top Growth Score and has registered a remarkable average quarterly beat of 11.5% with successive beats in the last four quarters.
With its impressive combination of a top Zacks Rank and positive earnings ESP, this company looks set to post another earnings beat on Jul 20.
Ryerson Holding Corporation (RYI - Free Report) is a leading processor and distributor of various forms of stainless steel, aluminum, carbon, alloy steel, nickel and red metals.
This Zacks Rank #2 stock has an Earnings ESP of +7.69%. The Most Accurate Estimate for the company is currently pegged at 42 cents, ahead of the Zacks Consensus Estimate, which is pegged at 39 cents for the upcoming quarter.
The company, boasting a top Growth Score, has beaten estimates in three out of the last four quarters, registering a whopping average four-quarter beat of 118.2%. Moreover, its estimate for 2016 earnings has climbed up from $1.16 per share to $1.25 per share over the past month.
With its impressive combination of a top Zacks Rank and a positive earnings ESP, this company looks set to continue with its winning streak in the to-be reported quarter, the results of which will be announced on Aug 10.
Trinseo SA (TSE - Free Report) is a global materials company and manufacturer of plastics, latex and rubber.
This Zacks Rank #1 (Strong Buy) stock has an Earnings ESP of +6.06%. The Most Accurate Estimate for the company is currently pegged at $1.75, ahead of the Zacks Consensus Estimate, which is pegged at $1.65 for the soon-to-be-reported quarter.
The company has registered an average quarterly beat of over 2% in the trailing four quarters. With its impressive combination of a top Zacks Rank and a positive earnings ESP, this company looks confident of posting an earnings beat on Aug 1.
Post Holdings, Inc. (POST - Free Report) is a manufacturer, marketer and distributor of branded ready-to-eat cereals in the United States and Canada.
This Zacks Rank #1 stock has an Earnings ESP of +12.77%. The Most Accurate Estimate for the company is currently 53 cents, ahead of the Zacks Consensus Estimate of 47 cents for the to-be reported quarter.
The company has posted an average beat of more than 345% in the trailing four quarters
With these time-tested elements in its favor, the company is likely to beat the consensus and post another huge surprise on Aug 8.
PGT, Inc. is one of the leading manufacturers and suppliers of residential impact-resistant windows and doors in the U.S.
This Zacks Rank #2 stock has an Earnings ESP of +13.33%. The Most Accurate Estimate for the company is currently pegged at 17 cents, higher than the Zacks Consensus Estimate of 15 cents for the soon-to-be-reported quarter.
The company has registered an average four-quarter beat of 1.66%. With its impressive combination of a top Zacks Rank and a positive earnings ESP, this company looks set to post another earnings beat on Aug 3.
Be a Winner
Like always, some stocks will skyrocket after the earnings are announced while others will fall off the cliff. Employing Zacks' ESP methodology helps you to track down the likely outperformers before they report.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>