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Bear Of The Day:ESCO Technologies (ESE)

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ESCO Technologies (ESE - Free Report) is a Zacks Rank #5 (Strong Sell) as earnings estimates have tracked lower after a recent earnings beat.  The company is best known for its software that enables the vision of what energy information can accomplish for a utility. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.


ESCO Technologies, Inc. is a producer of engineered products and systems, which engages in the provision of utility, industrial, aerospace, and commercial applications. It operates through the following segments: Aerospace and Defense, Utility Solutions Group, and RF Test and Measurement. The Aerospace and Defense segment designs and manufactures filtration products, including hydraulic filter elements and fluid control devices used in commercial and defense aerospace applications, filter mechanisms used in micro-propulsion devices for satellites, and custom designed filters for manned aircraft and submarines. The Utility Solutions Group segment provides diagnostic testing solutions that enable electric power grid operators to assess the integrity of high-voltage power delivery equipment. The RF Test and Measurement segment focuses on providing customers with the ability to identify, measure and control magnetic, electromagnetic, and acoustic energy. The company was founded in October 1990 and is headquartered in St. Louis, MO.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of ESCO Technologies, I see three beats and one miss of the Wall Street Estimate. The most recent quarter was a miss with the company posting $0.62 when $0.65 was expected.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For ESE I see annual estimates moving lower of late.

The current year (2024) consensus number moved lower from $4.66 to $4.20 over the last 60 days. 

The next year has held still at $4.79 over the last 60 days.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a lot of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

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