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3 Solid Stocks to Invest In for Attractive Earnings Growth
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Study a company’s revenues over a given period, subtract the production cost, and you have earnings. Regardless of whether it is a start-up or a renowned company, earnings growth is the highest priority for any organization. This is because if the company doesn’t make money, it won’t last in the long run. 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 price of stock 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’ opinions 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.
Thus, investors should be on the lookout for stocks ready to make a big move. Hence, investors need to buy stocks with historical earnings growth and are seeing a rise in quarterly and annual earnings estimates.
Screening Measures:
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 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 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 11. Here are the top three stocks that stand out:
Wingstop (WING - Free Report) franchises and operates restaurants. The company's operating segments consist of the Franchise segment and the Company segment. The company has a Zacks Rank #1 (Strong Buy). WING’s expected earnings growth rate for the current year is 13%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Allison Transmission Holdings (ALSN - Free Report) is a manufacturer of fully-automatic transmissions for medium and heavy-duty commercial and heavy-tactical U.S. defense vehicles. The company has a Zacks Rank #1. ALSN’s expected earnings growth rate for the current year is 19.5%.
ServiceNow (NOW - Free Report) provides cloud computing services that automate digital workflows to accelerate enterprise IT operations. The company has a Zacks Rank #1. NOW’s expected earnings growth rate for the current year is 26.4%.
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 Solid Stocks to Invest In for Attractive Earnings Growth
Study a company’s revenues over a given period, subtract the production cost, and you have earnings. Regardless of whether it is a start-up or a renowned company, earnings growth is the highest priority for any organization. This is because if the company doesn’t make money, it won’t last in the long run. 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 price of stock 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’ opinions 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.
Thus, investors should be on the lookout for stocks ready to make a big move. Hence, investors need to buy stocks with historical earnings growth and are seeing a rise in quarterly and annual earnings estimates.
Screening Measures:
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 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 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 11. Here are the top three stocks that stand out:
Wingstop (WING - Free Report) franchises and operates restaurants. The company's operating segments consist of the Franchise segment and the Company segment. The company has a Zacks Rank #1 (Strong Buy). WING’s expected earnings growth rate for the current year is 13%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Allison Transmission Holdings (ALSN - Free Report) is a manufacturer of fully-automatic transmissions for medium and heavy-duty commercial and heavy-tactical U.S. defense vehicles. The company has a Zacks Rank #1. ALSN’s expected earnings growth rate for the current year is 19.5%.
ServiceNow (NOW - Free Report) provides cloud computing services that automate digital workflows to accelerate enterprise IT operations. The company has a Zacks Rank #1. NOW’s expected earnings growth rate for the current year is 26.4%.
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