U.S. markets closed
  • S&P 500

    3,577.59
    +20.05 (+0.56%)
     
  • Dow 30

    29,591.27
    +327.79 (+1.12%)
     
  • Nasdaq

    11,880.63
    +25.66 (+0.22%)
     
  • Russell 2000

    1,818.30
    +32.96 (+1.85%)
     
  • Crude Oil

    42.84
    +0.42 (+0.99%)
     
  • Gold

    1,835.20
    -37.20 (-1.99%)
     
  • Silver

    23.61
    -0.75 (-3.09%)
     
  • EUR/USD

    1.1840
    -0.0022 (-0.19%)
     
  • 10-Yr Bond

    0.8570
    +0.0280 (+3.38%)
     
  • GBP/USD

    1.3324
    +0.0032 (+0.24%)
     
  • USD/JPY

    104.5000
    +0.6720 (+0.65%)
     
  • BTC-USD

    18,362.23
    -92.51 (-0.50%)
     
  • CMC Crypto 200

    364.49
    +3.06 (+0.85%)
     
  • FTSE 100

    6,333.84
    -17.61 (-0.28%)
     
  • Nikkei 225

    25,527.37
    -106.93 (-0.42%)
     

Why the Earnings Surprise Streak Could Continue for Amphastar (AMPH)

Zacks Equity Research
·3 min read

Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report? Amphastar Pharmaceuticals (AMPH), which belongs to the Zacks Medical - Generic Drugs industry, could be a great candidate to consider.

When looking at the last two reports, this specialty pharmaceutical company has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 32.50%, on average, in the last two quarters.

For the last reported quarter, Amphastar came out with earnings of $0.07 per share versus the Zacks Consensus Estimate of $0.05 per share, representing a surprise of 40%. For the previous quarter, the company was expected to post earnings of $0.08 per share and it actually produced earnings of $0.10 per share, delivering a surprise of 25%.

Price and EPS Surprise

For Amphastar, estimates have been trending higher, thanks in part to this earnings surprise history. And when you look at the stock's positive Zacks Earnings ESP (Expected Surprise Prediction), it's a great indicator of a future earnings beat, especially when combined with its solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Amphastar has an Earnings ESP of +9.09% at the moment, suggesting that analysts have grown bullish on its near-term earnings potential. When you combine this positive Earnings ESP with the stock's Zacks Rank #2 (Buy), it shows that another beat is possibly around the corner. The company's next earnings report is expected to be released on May 7, 2020.

When the Earnings ESP comes up negative, investors should note that this will reduce the predictive power of the metric. But, a negative value is not indicative of a stock's earnings miss.

Many companies end up beating the consensus EPS estimate, though this is not the only reason why their shares gain. Additionally, some stocks may remain stable even if they end up missing the consensus estimate.

Because of this, it's really important to check a company's Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Amphastar Pharmaceuticals Inc (AMPH) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research