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Why the Earnings Streak Will Continue for Domtar (UFS)

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Looking for a stock that might be in a good position to beat earnings at its next report? Consider Domtar Corporation (UFS - Free Report) , a firm in the Paper and Related Products industry, which could be a great candidate for another beat.

This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, UFS has beaten estimates by at least 15% in both cases, suggesting it has a nice short-term history of crushing expectations.

Earnings in Focus

Two quarters ago, UFS expected to post earnings of 53 cents per share, while it actually produced earnings of 61 cents per share, a beat of 15.1%. Meanwhile, for the most recent quarter, the company looked to deliver earnings of 73 cents per share, when it actually delivered earnings of $1.03 per share, representing 41.1% positive surprise.

Domtar Corporation Price and EPS Surprise

Thanks in part to this history, recent estimates have been moving higher for Domtar. In fact, the Earnings ESP for UFS is positive, which is a great sign of a coming beat.

After all, the Zacks Earnings ESP compares the most accurate estimate to the broad consensus, looking to find stocks that have seen big revisions as of late, suggesting that analysts have recently become more bullish on the company’s earnings prospects. This is the case for UFS, as the firm currently has a Zacks Earnings ESP of +25.63%, so another beat could be around the corner.

This is particularly true when you consider that UFS has a great Zacks Rank #2 (Buy) which can be a harbinger of outperformance and a signal for a strong earnings profile. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

When you add this solid Zacks Rank to a positive Earnings ESP, a positive earnings surprise happens nearly 70%of the time, so it seems pretty likely that UFS could see another beat at its next report, especially if recent trends are any guide.

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