We are already roughly halfway through second-quarter 2019 earnings season. Many of the biggest companies and all of the so-called FAANG stocks, from Amazon (AMZN) to Facebook (FB), have reported—with Apple (AAPL) set to release its quarterly results after the closing bell Tuesday. This means now could be a great time to look at a ‘First Profit’ stock screen.
The idea here is to search for companies that just reported their first quarterly profit within the last year. More specifically, the screen searches for firms that just posted their first profit last quarter after not posting a profit for at least the previous 4 quarters. Clearly, this is a screen best run after every earnings season.
These companies may vary widely. Some of the firms might be new, and this recent profit is perhaps the only profit in its short history. Meanwhile, other companies might have held an impressive and long history of quarterly profitability, but for whatever reason haven't seen a profit in a while. Therefore, the turn to profit could spark a turning point that management had promised or Wall Street had been clamoring for.
The concept is relatively simple: if the trend has been one of improvement, there is a solid chance the trend will continue. This is true whether a company has been profitable or is just reaching that key inflection point.
With that said, some investors will not touch companies that can’t show a profit. On top of that, there are many more who won’t consider a stock unless it’s making money.
Obviously, losing less money than the prior quarter is a positive sign, as it shows growth. Then firms hit a point where they grow and grow and eventually become profitable. These are the stocks that will likely see more demand from new investors…
And that’s what we’re screening for today:
• EPS for the previous 4 Quarters less than or equal to 0
(This means in each of the previous 4 quarters (except the most recently reported quarter) the company has reported earnings of less than or equal to zero, i.e., no profit.)
• EPS for the recently reported quarter greater than 0
(This time, the company reported earnings greater than zero, meaning they finally showed a profit.)
• Current Price greater than or equal to 5
(Stocks that are trading for less than $5 are more speculative.)
The screen is pretty simple yet pretty powerful.
Here are 5 stocks that made it through this week's screen… all of the companies either just reported positive earnings, or did so last quarter and are set to release their results soon.
Diebold Nixdorf, Incorporated (DBD)
Esperion Therapeutics, Inc. (ESPR)
Viasat Inc. (VSAT)
Impinj, Inc. (PI)
XOMA Corporation (XOMA)
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XOMA Corporation (XOMA) : Free Stock Analysis Report
Viasat Inc. (VSAT) : Free Stock Analysis Report
Impinj, Inc. (PI) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Esperion Therapeutics, Inc. (ESPR) : Free Stock Analysis Report
Diebold Nixdorf, Incorporated (DBD) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
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