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4 Stocks to Keep a Tab on for Superb Earnings Acceleration
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Incremental growth in a company’s earnings per share (EPS) is known as earnings acceleration. In other words, if the rate of a company’s quarter-over-quarter earnings growth increases within a stipulated frame of time, it can be called earnings acceleration.
Studies have shown that majority of successful stocks have seen an acceleration in earnings before an uptick in the stock price. In case of earnings growth, you pay for something that is already reflected in the stock price. But earnings acceleration helps to 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.
The increasing percentage of earnings growth means that the company is fundamentally sound and has been on the right track for a considerable period of time. Meanwhile, a sideways percentage of earnings growth indicates a period of consolidation or slowdown, while a decelerating percentage of earnings growth may at times drag prices down.
Screening Parameters
Let’s look at stocks for which the last two quarter-over-quarter percentage EPS growth rates exceed 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 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 7,735 stocks to only 14. Here are the four stocks that stand out:
PDF Solutions (PDFS - Free Report) is known for providing comprehensive technologies and services that enable semiconductor companies to improve the yield and performance of manufactured integrated circuits by providing infrastructure to integrate the design and manufacturing processes. PDFS has a Zacks Rank #2 (Buy). PDF Solutions’ expected earnings growth rate for the current year is 425%. You can see the complete list of today’s Zacks #1 Rank stocks here.
PattersonUTI Energy (PTEN - Free Report) is an oilfield services company. PTEN has a Zacks Rank #2. PattersonUTI Energy’s expected earnings growth rate for the current year is 118.7%.
Royal Caribbean Cruises (RCL - Free Report) is a cruise company. It owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. RCL has a Zacks Rank #3 (Hold). Royal Caribbean Cruises’ expected earnings growth rate for the current year is nearly 65%.
Boeing (BA - Free Report) is one of the constituents of the Dow Jones Industrial Average. The company’s premier jet aircraft, along with varied defense products, positions it as one of the largest defense contractors in the United States. BA has a Zacks Rank #3. Boeing’s expected earnings growth rate for the current year is 82.1%.
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.
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4 Stocks to Keep a Tab on for Superb Earnings Acceleration
Incremental growth in a company’s earnings per share (EPS) is known as earnings acceleration. In other words, if the rate of a company’s quarter-over-quarter earnings growth increases within a stipulated frame of time, it can be called earnings acceleration.
Studies have shown that majority of successful stocks have seen an acceleration in earnings before an uptick in the stock price. In case of earnings growth, you pay for something that is already reflected in the stock price. But earnings acceleration helps to 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.
The increasing percentage of earnings growth means that the company is fundamentally sound and has been on the right track for a considerable period of time. Meanwhile, a sideways percentage of earnings growth indicates a period of consolidation or slowdown, while a decelerating percentage of earnings growth may at times drag prices down.
Screening Parameters
Let’s look at stocks for which the last two quarter-over-quarter percentage EPS growth rates exceed 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 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 7,735 stocks to only 14. Here are the four stocks that stand out:
PDF Solutions (PDFS - Free Report) is known for providing comprehensive technologies and services that enable semiconductor companies to improve the yield and performance of manufactured integrated circuits by providing infrastructure to integrate the design and manufacturing processes. PDFS has a Zacks Rank #2 (Buy). PDF Solutions’ expected earnings growth rate for the current year is 425%. You can see the complete list of today’s Zacks #1 Rank stocks here.
PattersonUTI Energy (PTEN - Free Report) is an oilfield services company. PTEN has a Zacks Rank #2. PattersonUTI Energy’s expected earnings growth rate for the current year is 118.7%.
Royal Caribbean Cruises (RCL - Free Report) is a cruise company. It owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. RCL has a Zacks Rank #3 (Hold). Royal Caribbean Cruises’ expected earnings growth rate for the current year is nearly 65%.
Boeing (BA - Free Report) is one of the constituents of the Dow Jones Industrial Average. The company’s premier jet aircraft, along with varied defense products, positions it as one of the largest defense contractors in the United States. BA has a Zacks Rank #3. Boeing’s expected earnings growth rate for the current year is 82.1%.
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.