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4 Top Stocks With the Power of Earnings Acceleration
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Take a company’s revenues over a given period of time, subtract the cost of production and you will have its earnings! Right from the top brass to research analysts, earnings growth interests every single one. This is because upbeat earnings serve as an indicator of a company’s profitability. It also more often than not leads to an uptick in the share price.
Studies, however, have shown that a majority of successful stocks have seen acceleration in earnings before a positive stock price movement. Hence, earnings acceleration works even better in lifting the stock price.
Future Outperformers
Basically, earnings acceleration is the incremental growth in earnings of a company. In other words, if the rate of a company’s quarter-over-quarter earnings growth increases within a stipulated frame of time, it can be referred to as earnings acceleration.
Earnings acceleration helps spot stocks that haven’t caught the attention of investors yet, which once secured will invariably lead to an uptick in the share price. This is because earnings acceleration considers both direction and magnitude of growth rates. However, if you pick stocks just on the basis of earnings growth then you are paying for something that has already been reflected in the stock price.
Increase in the percentage of earnings growth convinces us about the fundamental soundness of the company. A sideways percentage of earnings growth, in the meanwhile, indicates a period of consolidation or slowdown. If the earnings growth percentage moderates, share prices are more likely to decline.
This is the reason why earnings acceleration should be viewed as a key metric for share price outperformance.
Screening Parameters:
Let’s find out stocks for which the last two quarter-over-quarter percentage EPS growth rates are higher than the growth rates of the previous periods. 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 the 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 7,713 stocks to only 15. Here are the top four stocks:
Entercom Communications Corp. operates as a radio broadcasting company in the United States. The company has a Zacks Rank #2 (Buy). The company’s projected earnings growth rate for the current quarter and year are 37.5% and 32.4%, respectively.
Insulet Corporation (PODD - Free Report) develops, manufactures, and sells insulin delivery systems for people with insulin-dependent diabetes in the United States and internationally. The company has a Zacks Rank #2. The company’s projected earnings growth rate for the current and next quarters are 175% and 125%, respectively.
ESCO Technologies Inc. (ESE - Free Report) produces and supplies engineered products and systems for utility, industrial, aerospace, and commercial applications worldwide. The company has a Zacks Rank #2. The company’s projected earnings growth rate for the current quarter is 44.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tristate Capital Holdings, Inc. operates as the bank holding company for TriState Capital Bank that provides various commercial and private banking services to middle-market businesses and high-net-worth individuals in the United States. The company has a Zacks Rank #1. The company’s projected earnings growth rate for the current quarter and year are 31.4% and 43.6%, respectively.
You can get the rest of the stocks on this list by signing 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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
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4 Top Stocks With the Power of Earnings Acceleration
Take a company’s revenues over a given period of time, subtract the cost of production and you will have its earnings! Right from the top brass to research analysts, earnings growth interests every single one. This is because upbeat earnings serve as an indicator of a company’s profitability. It also more often than not leads to an uptick in the share price.
Studies, however, have shown that a majority of successful stocks have seen acceleration in earnings before a positive stock price movement. Hence, earnings acceleration works even better in lifting the stock price.
Future Outperformers
Basically, earnings acceleration is the incremental growth in earnings of a company. In other words, if the rate of a company’s quarter-over-quarter earnings growth increases within a stipulated frame of time, it can be referred to as earnings acceleration.
Earnings acceleration helps spot stocks that haven’t caught the attention of investors yet, which once secured will invariably lead to an uptick in the share price. This is because earnings acceleration considers both direction and magnitude of growth rates. However, if you pick stocks just on the basis of earnings growth then you are paying for something that has already been reflected in the stock price.
Increase in the percentage of earnings growth convinces us about the fundamental soundness of the company. A sideways percentage of earnings growth, in the meanwhile, indicates a period of consolidation or slowdown. If the earnings growth percentage moderates, share prices are more likely to decline.
This is the reason why earnings acceleration should be viewed as a key metric for share price outperformance.
Screening Parameters:
Let’s find out stocks for which the last two quarter-over-quarter percentage EPS growth rates are higher than the growth rates of the previous periods. 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 the 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 7,713 stocks to only 15. Here are the top four stocks:
Entercom Communications Corp. operates as a radio broadcasting company in the United States. The company has a Zacks Rank #2 (Buy). The company’s projected earnings growth rate for the current quarter and year are 37.5% and 32.4%, respectively.
Insulet Corporation (PODD - Free Report) develops, manufactures, and sells insulin delivery systems for people with insulin-dependent diabetes in the United States and internationally. The company has a Zacks Rank #2. The company’s projected earnings growth rate for the current and next quarters are 175% and 125%, respectively.
ESCO Technologies Inc. (ESE - Free Report) produces and supplies engineered products and systems for utility, industrial, aerospace, and commercial applications worldwide. The company has a Zacks Rank #2. The company’s projected earnings growth rate for the current quarter is 44.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tristate Capital Holdings, Inc. operates as the bank holding company for TriState Capital Bank that provides various commercial and private banking services to middle-market businesses and high-net-worth individuals in the United States. The company has a Zacks Rank #1. The company’s projected earnings growth rate for the current quarter and year are 31.4% and 43.6%, respectively.
You can get the rest of the stocks on this list by signing 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
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »