The Q3 earnings season has almost come to an end, with a positive growth scenario witnessed after five straight quarters of earnings declines.
Per our Earnings Outlook report as of Nov 17, out of the 470 S&P 500 companies that have come up with their quarterly numbers, approximately 73.2% posted positive earnings surprises, while 55.3% beat top-line expectations. Total earnings for these index members were up 3.8% from the year-ago quarter, while revenues increased 2.6%. The report projects that earnings for the total S&P 500 companies will improve 3.5% from the year-ago period, with total revenue rising 1.5%.
The performance of the index is not restricted to a single sector, and of the 16 Zacks sectors, four are expected to witness an earnings decline in the third quarter. Of these, Auto, Oil/Energy and Transportation are likely to be a major drag. However, the Consumer Discretionary sector is witnessing a significant improvement.
Total earnings for the Consumer Discretionary sector are estimated to rise 7.2%, whereas revenues are projected to improve 11.7%. So, let’s see what awaits the following consumer stocks within the Consumer Discretionary sector that are queued up for earnings releases early next week.
International Game Technology PLC (IGT - Free Report) is scheduled to report its third-quarter 2016 results on Nov 21. The company outperformed the Zacks Consensus Estimate in the trailing four quarters by an average of 36.7%.
Our proven model does not conclusively show that International Game Technology is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
This designer and manufacturer of casino-style gaming equipment, systems technology, and game content has an Earnings ESP of -4.55% as the Most Accurate estimate is at 42 cents while the Zacks Consensus Estimate is pegged at 44 cents. The company sports a Zacks Rank #1, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
Next, let’s take a sneak peek at American Woodmark Corp. (AMWD - Free Report) , which is slated to report second-quarter fiscal 2017 results on Nov 22. Notably, the company posted positive earnings surprises in all of the trailing four quarters, with an average of 33.1%.
This manufacturer and distributor of kitchen cabinets and vanities has an Earnings ESP of -4.13% as the Most Accurate estimate stands at $1.16 while the Zacks Consensus Estimate is pegged at $1.21. The company carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Though a favorable Zacks Rank increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
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