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4 Stocks to Keep a Tab on for Amazing Earnings Acceleration
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Companies showcasing persistent earnings growth will continue to captivate almost everyone in the investment world, from top brass to research analysts. This is because earnings are a measure of the money a company is making. Still, earnings acceleration works better when lifting the stock price.
Studies have shown that most successful stocks have seen an acceleration in earnings before an uptick in the stock price. Some of the notable companies to have witnessed solid earnings acceleration as of now are Sana Biotechnology (SANA - Free Report) , LifeMD (LFMD - Free Report) , Evolus (EOLS - Free Report) and Expro Group Holdings (XPRO - Free Report) .
Earnings acceleration is the incremental growth in a company’s earnings per share (EPS). In other words, if a company’s quarter-over-quarter earnings growth rate increases within a stipulated time frame, it can be called 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 yet caught the attention of investors. Once secured, it will invariably lead to a rally in the share price. This is because earnings acceleration considers both the direction and magnitude of growth rates.
An increasing percentage of earnings growth means that the company is fundamentally sound and has been on the right track for a considerable period. Meanwhile, a sideways percentage of earnings growth indicates a period of consolidation or slowdown, while a decelerating percentage of earnings growth may sometimes drag prices down.
Screening Parameters
Let us look at stocks for which the last two quarter-over-quarter percentage EPS growth rates exceed the previous periods’ growth rates. 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 11. Here are four of the 11 stocks that are worth a look:
Sana Biotechnology is focused on creating and delivering engineered cells as medicines for patients. The company currently has a Zacks Rank #3 (Hold). SANA’s expected earnings growth rate for the current year is 36.8%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
LifeMD is a telehealth company. It currently has a Zacks Rank #3. LFMD’s expected earnings growth rate for the current year is 78.6%.
Evolus is a medical aesthetics company. It currently has a Zacks Rank #2 (Buy). EOLS’ expected earnings growth rate for the current year is 72.2%.
Expro Group Holdings is an oil and gas service company. It currently has a Zacks Rank #3. XPRO’s expected earnings growth rate for the current year is 426.3%.
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.
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 Amazing Earnings Acceleration
Companies showcasing persistent earnings growth will continue to captivate almost everyone in the investment world, from top brass to research analysts. This is because earnings are a measure of the money a company is making. Still, earnings acceleration works better when lifting the stock price.
Studies have shown that most successful stocks have seen an acceleration in earnings before an uptick in the stock price. Some of the notable companies to have witnessed solid earnings acceleration as of now are Sana Biotechnology (SANA - Free Report) , LifeMD (LFMD - Free Report) , Evolus (EOLS - Free Report) and Expro Group Holdings (XPRO - Free Report) .
Earnings acceleration is the incremental growth in a company’s earnings per share (EPS). In other words, if a company’s quarter-over-quarter earnings growth rate increases within a stipulated time frame, it can be called 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 yet caught the attention of investors. Once secured, it will invariably lead to a rally in the share price. This is because earnings acceleration considers both the direction and magnitude of growth rates.
An increasing percentage of earnings growth means that the company is fundamentally sound and has been on the right track for a considerable period. Meanwhile, a sideways percentage of earnings growth indicates a period of consolidation or slowdown, while a decelerating percentage of earnings growth may sometimes drag prices down.
Screening Parameters
Let us look at stocks for which the last two quarter-over-quarter percentage EPS growth rates exceed the previous periods’ growth rates. 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 11. Here are four of the 11 stocks that are worth a look:
Sana Biotechnology is focused on creating and delivering engineered cells as medicines for patients. The company currently has a Zacks Rank #3 (Hold). SANA’s expected earnings growth rate for the current year is 36.8%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
LifeMD is a telehealth company. It currently has a Zacks Rank #3. LFMD’s expected earnings growth rate for the current year is 78.6%.
Evolus is a medical aesthetics company. It currently has a Zacks Rank #2 (Buy). EOLS’ expected earnings growth rate for the current year is 72.2%.
Expro Group Holdings is an oil and gas service company. It currently has a Zacks Rank #3. XPRO’s expected earnings growth rate for the current year is 426.3%.
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.
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