For Immediate Release
Chicago, IL – March 15, 2019– Stocks in this week’s article include Columbia Sportswear Company (COLM - Free Report) , Tactile Systems Technology Inc. (TCMD - Free Report) , Wright Medical Group N.V. (WMGI - Free Report) , Carbonite Inc. (CARB - Free Report) and Palo Alto Networks Inc. (PANW - Free Report) . Kevin Matras screens for companies showing their 'first' profit and explains why they are ones to watch.
Screen of the Week written by Kevin Matras of Zacks Investment Research:
Play Potential Earnings Beats with These 5 Top Stocks
There is no mystery to investors’ hunt for stocks with estimate beating potential ahead of an earnings season. This is because investors always try to place themselves ahead of time and look to play stocks that are rich in quality.
Why Is a Positive Earnings Surprise So Important?
Historically, stocks of companies with solid quarterly earnings (on a nominal basis) tank if they miss or merely meet market expectations. After all, a 20% earnings rise (though apparently looks good) doesn’t tell you if it has been decelerating.
Also, seasonal fluctuations can come into play. If a company’s Q1 is seasonally weak and Q4 is strong, it is likely to report a sequential earnings decline. In such cases, growth rates are misleading while judging the true health of a company.
On the other hand, after a whole lot of research and analysis on a company’s financials and initiatives, Wall Street analysts project its earnings. They also take a company’s guidance into consideration when deriving an earnings estimate.
Thus, outperforming that estimate is almost equivalent to beating the company’s own expectation as well as the market perception. And if the margin of earnings surprise is big, it typically drives the stock higher right after the release. Thus, more than anything else, an earnings surprise can push a stock higher.
How to Locate Potential Outperformers?
Now, finding stocks that have the potential to beat on the bottom line is a dream that investors chase but might not always come true. One way of fulfilling it is by looking at the earnings surprise history of a company.
An impressive track in this regard generally acts as a driver in sending a stock higher. It indicates the company’s ability to exceed estimates. And investors generally believe that the company will have the same trick up its sleeve to deliver yet another earning beat in its upcoming release.
For the rest of this Screen of the Week article please visit Zacks.com at:https://www.zacks.com/stock/news/359364/play-potential-earnings-beat-with-these-5-top-stocks
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