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3 Estimate-Beating Stocks to Keep On Your Radar

James Giaquinto

We love earnings season here at Zacks! Not only is it the time for companies to level with investors, but the analyst reactions to these reports form the foundation of our Zacks Rank. It's even better this particular earnings season, since the growth picture is improving and expected to continue doing so into the future.

But as even the most novice of investors know, earnings season is ultimately unpredictable...and not just the results but the reactions to reports as well. If you're looking for earnings season superstars, than Zacks' EPS Growth, Revisions & Positive Surprises screen is a great place to look. As the name implies, this screen seeks out Zacks Rank #1s (Strong Buys) with positive surprises and upward earnings estimates. These stocks are the best positioned to outperform in the near and longer terms.

Take a look at three stocks that have passed this screen below. Zacks Premium members already have access to this screen’s parameters and stocks, so you can take a look at the other names on the list. If you're not a member, this would be a good time to sign up.

Best Buy (BBY)

For 17 straight quarters now, Best Buy (BBY) has beaten the Zacks Consensus Estimate. That would be a commendable feat in any industry, but its all the more impressive given the volatile and ever-changing dynamic of retail…especially for the traditional brick-and-mortar names. But BBY is a forward-looking company, and it has really paid off. It’s “Renew Blue” strategy succeeded in improving the operating performance, and now it has moved on to “Best Buy 2020: Building the New Blue”. The top priority of this new strategy is to explore and pursue new growth opportunities, improve execution in key areas and cost optimization.

Shares of BBY are up approximately 14% year to date, but most of that gain came in March following its fiscal fourth quarter report. Last month alone, the stock was up more than 11%. The company reported earnings per share of $1.95 in the quarter, which was 17.5% better than the Zacks Consensus Estimate and 27% better than last year. Over the past four quarters, BBY has an average beat of 27.7%. Revenue in the quarter was a bit of a disappointment, but the good news is that online sales surged 17.5% year over year.

The stock is a Zacks Rank #1 (Strong Buy) because earnings estimates have moved sharply higher over the past two months. The Zacks Consensus Estimate for this fiscal year (ending January 2018) is up 5.7% in that time to $3.68 per share, as 10 of 11 analysts raised. Estimates for next fiscal year (ending January 2019) increased 6.5% to $3.94, suggesting year-over-year earnings growth of 7%.

Best Buy Co., Inc. Price, Consensus and EPS Surprise

Best Buy Co., Inc. Price, Consensus and EPS Surprise | Best Buy Co., Inc. Quote

Entegris (ENTG)

It doesn’t sound too exciting when you mention that Entegris (ENTG) is a provider of materials management solutions to the microelectronics industry. But if you say that its solutions are used in semiconductor manufacturing, then all of a sudden it becomes quite popular. That’s because semis are perhaps the hottest segment out there right now, so any company that is associated with the space has a leg up in a market that has suddenly turned more challenging.

ENTG has jumped 31% year to date, but that could just be the start. The company believes that the industry is in a multi-year period of wafer growth due to new technologies and expanding end-market demand for semiconductors. Earnings estimates are on the rise following its most recent quarterly report. The Zacks Consensus Estimate for 2017 is now at $1.04 per share, marking a gain of 6.1% over the past two months. The expectation for next year is up 15.7% in that time to $1.18, but that only takes one analyst into account. Still, it marks a year-over-year improvement of 13.5%.

Over the past eight quarters, ENTG has beaten seven times and matched once. Most recently, it reported earnings per share of 24 cents for its fourth quarter, which topped the Zacks Consensus Estimate by 14.3%. It has an average beat of 16.9% over the last four reports. Revenue was up 16% from last year to $308.5 million, also ahead of our expectations at nearly $283 million. ENTG stated its better-than-expected sales growth was due in part to a rebound in its specialty gas products and record demand for microfiltration, wafer handling and advanced deposition solutions. For the full year, non-GAAP earnings per share of 94 cents topped last year’s 85 cents, while revenue advanced 9% to $1.2 billion.


Entegris, Inc. Price, Consensus and EPS Surprise

Entegris, Inc. Price, Consensus and EPS Surprise | Entegris, Inc. Quote

Cognex Corporation (CGNX)

If machines need to “see” to do the job these days, then Cognex Corporation (CGNX) can be considered their eyes. The company provides machine vision technology, such as barcode readers, and it just surpassed half a billion dollars in revenue for 2016. Shares are up approximately 32% year to date, thanks in large part to a strong quarterly performance from mid February. CGNX has put together five consecutive quarters of positive surprises, averaging 28.4% over the past four.

Most recently, it earned 43 cents for its fourth quarter, or 43.3% better than the Zacks Consensus Estimate. Revenue was up 32% year over year due to a lot of business from the automotive, consumer electronics and logistics industries. Full-year results were just as impressive with CGNX announcing its highest annual revenue and earnings per share in its 36-year history. Looking toward the current quarter, the company expected revenue to grow between 27% and 30% from the previous year.

Earnings estimates for this year and next have improved in just the past 7 trading days, but the full extent of upward revisions can best be seen over the past two months. In that time, the Zacks Consensus Estimate for 2017 has jumped 12% to $1.94, while next year is up 9.9% to $2.34. As it stands right now, analysts expect 2018 earnings to improve 20% over this year.


Cognex Corporation Price, Consensus and EPS Surprise

Cognex Corporation Price, Consensus and EPS Surprise | Cognex Corporation Quote

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Entegris, Inc. (ENTG): Free Stock Analysis Report
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