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Earnings growth enthralls almost everyone, right from the top brass to research analysts. And why not? If the company doesn’t make money, it won’t last over the long haul. Take a company’s revenue over a given period of time, subtract the cost of production and, there it is, you have earnings!
This metric is also considered to be the most significant variable in influencing the share price. Better-than-expected earnings performances normally lead to a rally in the price of a stock. However, in addition to actual earnings, expectations of earnings play a vital role in determining the share price movement.
Earnings Estimates Shape Stock Prices
We have often seen a decline in the stock price despite earnings growth and a rally in the price following an earnings decline. This is largely a result of a company’s earnings failing to meet market expectations.
So, what does earnings estimates symbolize? Earnings estimates embody analysts’ opinions of factors such as sales growth, product demand, competitive industry environment, profit margins and cost controls. Thus, earnings estimates are a valuable tool for investors. Analysts can also examine the cash flow based on these periodic earnings estimates to determine the fair value of the company.
To start off our New Year, we have picked stocks that have displayed historical earnings growth and are also seeing a rise in quarterly and annual earnings estimates.
Screening Parameters:
In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we added the following parameters:
Zacks Rank less than or equal to 2 (Only Zacks' 'Buys' and 'Strong Buys' are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.)
5-Year Historical EPS Growth (%) greater than X-Industry. (Stocks that possess strong EPS growth history.)
% Change EPS F(0)/F(-1) greater than or equal to 5 (Companies that witnessed year-over-year earnings growth rate of 5% or more in the last reported fiscal.)
% Change Q1 Estimates over the last 4 weeks greater than zero(Stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks.)
% Change F1 Estimates over the last 1 week greater than zero (Stocks that have seen their annual earnings estimates revised higher in the last 1 week.)
% Change F1 Estimates over the last 4 weeks greater than zero (Stocks that have seen their annual earnings estimates revised higher in the last 4 weeks.)
The above criteria narrowed down the universe of around 7,854 stocks to only nine. Here are the top five stocks:
Constellation Brands, Inc. (STZ - Free Report) produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. The Zacks Consensus Estimate for its current year earnings increased 0.5% over the last 60 days. Constellation Brands has a Zacks Rank #2 (Buy).
The Children's Place, Inc. (PLCE - Free Report) operates as a children's specialty apparel retailer. The Zacks Consensus Estimate for its current year earnings increased 7.9% over the last 60 days. Children's Place has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fox Factory Holding Corp (FOXF - Free Report) designs, engineers, manufactures, and markets ride dynamics products worldwide. The Zacks Consensus Estimate for its current year earnings increased 0.8% over the last 60 days. Fox Factory has a Zacks Rank #2.
Applied Materials, Inc. (AMAT - Free Report) provides manufacturing equipment, services, and software to the semiconductor, display, and related industries worldwide. The Zacks Consensus Estimate for its current year earnings increased 6.2% over the last 60 days. Applied Materials has a Zacks Rank #1.
Papa John's International, Inc. (PZZA - Free Report) operates and franchises pizza delivery and carryout restaurants under the Papa John’s trademark in the United States and internationally. The Zacks Consensus Estimate for its current year earnings increased 2.4% over the last 90 days. Papa John's International has a Zacks Rank #2.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
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5 Top Earnings Growth Stocks for January
Earnings growth enthralls almost everyone, right from the top brass to research analysts. And why not? If the company doesn’t make money, it won’t last over the long haul. Take a company’s revenue over a given period of time, subtract the cost of production and, there it is, you have earnings!
This metric is also considered to be the most significant variable in influencing the share price. Better-than-expected earnings performances normally lead to a rally in the price of a stock. However, in addition to actual earnings, expectations of earnings play a vital role in determining the share price movement.
Earnings Estimates Shape Stock Prices
We have often seen a decline in the stock price despite earnings growth and a rally in the price following an earnings decline. This is largely a result of a company’s earnings failing to meet market expectations.
So, what does earnings estimates symbolize? Earnings estimates embody analysts’ opinions of factors such as sales growth, product demand, competitive industry environment, profit margins and cost controls. Thus, earnings estimates are a valuable tool for investors. Analysts can also examine the cash flow based on these periodic earnings estimates to determine the fair value of the company.
To start off our New Year, we have picked stocks that have displayed historical earnings growth and are also seeing a rise in quarterly and annual earnings estimates.
Screening Parameters:
In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we added the following parameters:
Zacks Rank less than or equal to 2 (Only Zacks' 'Buys' and 'Strong Buys' are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.)
5-Year Historical EPS Growth (%) greater than X-Industry. (Stocks that possess strong EPS growth history.)
% Change EPS F(0)/F(-1) greater than or equal to 5 (Companies that witnessed year-over-year earnings growth rate of 5% or more in the last reported fiscal.)
% Change Q1 Estimates over the last 4 weeks greater than zero(Stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks.)
% Change F1 Estimates over the last 1 week greater than zero (Stocks that have seen their annual earnings estimates revised higher in the last 1 week.)
% Change F1 Estimates over the last 4 weeks greater than zero (Stocks that have seen their annual earnings estimates revised higher in the last 4 weeks.)
The above criteria narrowed down the universe of around 7,854 stocks to only nine. Here are the top five stocks:
Constellation Brands, Inc. (STZ - Free Report) produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. The Zacks Consensus Estimate for its current year earnings increased 0.5% over the last 60 days. Constellation Brands has a Zacks Rank #2 (Buy).
The Children's Place, Inc. (PLCE - Free Report) operates as a children's specialty apparel retailer. The Zacks Consensus Estimate for its current year earnings increased 7.9% over the last 60 days. Children's Place has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fox Factory Holding Corp (FOXF - Free Report) designs, engineers, manufactures, and markets ride dynamics products worldwide. The Zacks Consensus Estimate for its current year earnings increased 0.8% over the last 60 days. Fox Factory has a Zacks Rank #2.
Applied Materials, Inc. (AMAT - Free Report) provides manufacturing equipment, services, and software to the semiconductor, display, and related industries worldwide. The Zacks Consensus Estimate for its current year earnings increased 6.2% over the last 60 days. Applied Materials has a Zacks Rank #1.
Papa John's International, Inc. (PZZA - Free Report) operates and franchises pizza delivery and carryout restaurants under the Papa John’s trademark in the United States and internationally. The Zacks Consensus Estimate for its current year earnings increased 2.4% over the last 90 days. Papa John's International has a Zacks Rank #2.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
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.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »