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3 Stocks to Keep an Eye on for Earnings Growth in 2023
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Regardless of whether it is a start-up or a well-known company, earnings growth is the top-most priority for any organization. This is because if the company doesn’t make money, it won’t last in the long run.
So, what’s earnings growth? Study a company’s revenues over a given period of time, subtract the cost of production, and you have earnings. By the way, this is also considered the most important variable influencing share price. But, expectations of earnings play a noteworthy role.
Earnings Estimates & Share Price Movements
Frequently, we have seen a decline in the stock price despite earnings growth and a rally in price following an earnings decline. This is largely the result of a company’s earnings failing to meet market expectations.
Earnings estimates embody analysts’ opinion on factors such as sales growth, product demand, competitive industry environment, profit margins and cost control. Thus, earnings estimates serve as a valuable tool, while making investment decisions. Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.
Investors, thus, should be on the lookout for stocks that are ready to make a big move. Hence, investors need to buy stocks with historical earnings growth that are seeing a rise in quarterly and annual earnings estimates.
Screening Measures:
In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we have added the following parameters:
Zacks Rank less than or equal to 3 (Only Zacks’ ‘Buys’, ‘Strong Buys’ and ‘Hold’ 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 with a strong EPS growth history).
% Change EPS F(0)/F(-1) greater than or equal to 5 (companies that saw year-over-year earnings growth 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 7,839 stocks to only three. Here are the stocks:
Halozyme Therapeutics (HALO - Free Report) is a biopharmaceutical company, focused on the development and commercialization of novel treatments for oncology indications by targeting tumor microenvironment. HALO’s expected earnings growth rate for next year is 38.2%. Halozyme Therapeutics has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arista Networks (ANET - Free Report) is engaged in providing cloud networking solutions for data centers and cloud computing environments. Arista Networks has a Zacks Rank #1. ANET’s expected earnings growth rate for next year is 18.8%.
Citizens Financial Group (CFG - Free Report) is one of the largest retail banks’ holding companies in the United States. Citizens Financial Group has a Zacks Rank #2. CFG’s expected earnings growth rate for next year is 19.9%.
You can sign 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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3 Stocks to Keep an Eye on for Earnings Growth in 2023
Regardless of whether it is a start-up or a well-known company, earnings growth is the top-most priority for any organization. This is because if the company doesn’t make money, it won’t last in the long run.
So, what’s earnings growth? Study a company’s revenues over a given period of time, subtract the cost of production, and you have earnings. By the way, this is also considered the most important variable influencing share price. But, expectations of earnings play a noteworthy role.
Earnings Estimates & Share Price Movements
Frequently, we have seen a decline in the stock price despite earnings growth and a rally in price following an earnings decline. This is largely the result of a company’s earnings failing to meet market expectations.
Earnings estimates embody analysts’ opinion on factors such as sales growth, product demand, competitive industry environment, profit margins and cost control. Thus, earnings estimates serve as a valuable tool, while making investment decisions. Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.
Investors, thus, should be on the lookout for stocks that are ready to make a big move. Hence, investors need to buy stocks with historical earnings growth that are seeing a rise in quarterly and annual earnings estimates.
Screening Measures:
In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we have added the following parameters:
Zacks Rank less than or equal to 3 (Only Zacks’ ‘Buys’, ‘Strong Buys’ and ‘Hold’ 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 with a strong EPS growth history).
% Change EPS F(0)/F(-1) greater than or equal to 5 (companies that saw year-over-year earnings growth 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 7,839 stocks to only three. Here are the stocks:
Halozyme Therapeutics (HALO - Free Report) is a biopharmaceutical company, focused on the development and commercialization of novel treatments for oncology indications by targeting tumor microenvironment. HALO’s expected earnings growth rate for next year is 38.2%. Halozyme Therapeutics has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arista Networks (ANET - Free Report) is engaged in providing cloud networking solutions for data centers and cloud computing environments. Arista Networks has a Zacks Rank #1. ANET’s expected earnings growth rate for next year is 18.8%.
Citizens Financial Group (CFG - Free Report) is one of the largest retail banks’ holding companies in the United States. Citizens Financial Group has a Zacks Rank #2. CFG’s expected earnings growth rate for next year is 19.9%.
You can sign 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.