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3 Stocks with Superb Earnings Acceleration to Buy Now
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Unswerving earnings growth captivates almost everyone, right from the top brass to research analysts. This is because earnings are a measure of money a company is making. Notably, earnings are essentially revenues that the company generates after deducting the cost of production over a given period of time.
Better-than-expected earnings results mostly lead to an uptick in the share price. Studies, however, have shown that a majority of successful stocks had seen acceleration in earnings before a positive stock price movement. Hence, earnings acceleration works even better in driving stock price.
Spotting Future Outperformers
Earnings acceleration is nothing but incrementally growing earnings per share (EPS) of a company. In other words, if the rate of a company’s quarter-over-quarter earnings growth increases over a considerable period, it is termed as earnings acceleration.
In case of earnings growth, you pay for something that is already reflected in the stock price. But earnings acceleration helps spot stocks that haven’t caught the attention of investors yet, which once secured will invariably lead to a rally in the share price. This is because earnings acceleration considers both direction and magnitude of growth rates.
Increase in the percentage of earnings growth convinces us about the fundamental soundness of the company. A sideways percentage of earnings growth, on the other hand, indicates a period of consolidation or slowdown. If the earnings growth percentage moderates, share prices are more likely to nosedive.
Hence, earnings acceleration should be viewed as a key metric for share price outperformance.
Screening Parameters:
Let’s consider stocks for which the last two quarter-over-quarter percentage EPS growth rates are more than the growth rates of the previous periods. The projected quarter-over-quarter percentage EPS growth rates are also expected to be higher than the previous periods’ growth rates.
EPS % Projected Growth (Q1)/(Q0) greater than EPS % Growth (Q0)/(Q-1): The projected growth rate for the current quarter (Q1) over the completed quarter (Q0) has to be greater than the growth rate from the completed quarter (Q0) over one quarter ago (Q-1).
EPS % Growth (Q0)/(Q-1) greater than EPS % Growth (Q-1)/(Q-2): The growth rate for the completed quarter (Q0) over one quarter ago (Q-1) has to be greater than the growth rate from one quarter ago (Q-1) over two quarters ago (Q-2).
EPS % Growth (Q-1)/(Q-2) greater than EPS % Growth (Q-2)/(Q-3): The growth rate from one quarter ago (Q-1) over two quarters ago (Q-2) has to be greater than the growth rate from two quarters ago (Q-2) over three quarters ago (Q-3).
In addition to this, we have added the following parameters:
Current Price greater than or equal to $5: This screens out the low-priced stocks.
Average 20-day volume greater than or equal to 50,000: High trading volume implies that the stocks have adequate liquidity.
Intrawest Resorts Holdings, Inc. (SNOW - Free Report) operates as a mountain resort, adventure and real estate company in North America. The company operates through three segments: Mountain, Adventure and Real Estate. The Zacks Consensus Estimate for the company’s current year earnings rose 25.8% over the last 60 days.
U.S. Silica Holdings, Inc. (SLCA - Free Report) produces and sells commercial silica in the U.S. The company operates through two segments, Oil & Gas Proppants and Industrial & Specialty Products. The Zacks Consensus Estimate for the company’s current year earnings climbed more than 100% over the last 60 days.
RPC, Inc. (RES - Free Report) provides a range of oilfield services and equipment for oil and gas companies involved in the exploration, production, and development of oil and gas properties in the U.S., Africa, Canada, Argentina, China, Mexico, Eastern Europe, Latin America, and the Middle East. The Zacks Consensus Estimate for the company’s current year earnings increased 5.3% in the last 60 days.
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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3 Stocks with Superb Earnings Acceleration to Buy Now
Unswerving earnings growth captivates almost everyone, right from the top brass to research analysts. This is because earnings are a measure of money a company is making. Notably, earnings are essentially revenues that the company generates after deducting the cost of production over a given period of time.
Better-than-expected earnings results mostly lead to an uptick in the share price. Studies, however, have shown that a majority of successful stocks had seen acceleration in earnings before a positive stock price movement. Hence, earnings acceleration works even better in driving stock price.
Spotting Future Outperformers
Earnings acceleration is nothing but incrementally growing earnings per share (EPS) of a company. In other words, if the rate of a company’s quarter-over-quarter earnings growth increases over a considerable period, it is termed as earnings acceleration.
In case of earnings growth, you pay for something that is already reflected in the stock price. But earnings acceleration helps spot stocks that haven’t caught the attention of investors yet, which once secured will invariably lead to a rally in the share price. This is because earnings acceleration considers both direction and magnitude of growth rates.
Increase in the percentage of earnings growth convinces us about the fundamental soundness of the company. A sideways percentage of earnings growth, on the other hand, indicates a period of consolidation or slowdown. If the earnings growth percentage moderates, share prices are more likely to nosedive.
Hence, earnings acceleration should be viewed as a key metric for share price outperformance.
Screening Parameters:
Let’s consider stocks for which the last two quarter-over-quarter percentage EPS growth rates are more than the growth rates of the previous periods. The projected quarter-over-quarter percentage EPS growth rates are also expected to be higher than the previous periods’ growth rates.
EPS % Projected Growth (Q1)/(Q0) greater than EPS % Growth (Q0)/(Q-1): The projected growth rate for the current quarter (Q1) over the completed quarter (Q0) has to be greater than the growth rate from the completed quarter (Q0) over one quarter ago (Q-1).
EPS % Growth (Q0)/(Q-1) greater than EPS % Growth (Q-1)/(Q-2): The growth rate for the completed quarter (Q0) over one quarter ago (Q-1) has to be greater than the growth rate from one quarter ago (Q-1) over two quarters ago (Q-2).
EPS % Growth (Q-1)/(Q-2) greater than EPS % Growth (Q-2)/(Q-3): The growth rate from one quarter ago (Q-1) over two quarters ago (Q-2) has to be greater than the growth rate from two quarters ago (Q-2) over three quarters ago (Q-3).
In addition to this, we have added the following parameters:
Current Price greater than or equal to $5: This screens out the low-priced stocks.
Average 20-day volume greater than or equal to 50,000: High trading volume implies that the stocks have adequate liquidity.
The above criteria narrowed down the universe of around 7,816 stocks to only eight. Here are the top three stocks that have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Intrawest Resorts Holdings, Inc. (SNOW - Free Report) operates as a mountain resort, adventure and real estate company in North America. The company operates through three segments: Mountain, Adventure and Real Estate. The Zacks Consensus Estimate for the company’s current year earnings rose 25.8% over the last 60 days.
U.S. Silica Holdings, Inc. (SLCA - Free Report) produces and sells commercial silica in the U.S. The company operates through two segments, Oil & Gas Proppants and Industrial & Specialty Products. The Zacks Consensus Estimate for the company’s current year earnings climbed more than 100% over the last 60 days.
RPC, Inc. (RES - Free Report) provides a range of oilfield services and equipment for oil and gas companies involved in the exploration, production, and development of oil and gas properties in the U.S., Africa, Canada, Argentina, China, Mexico, Eastern Europe, Latin America, and the Middle East. The Zacks Consensus Estimate for the company’s current year earnings increased 5.3% in the last 60 days.
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 »