Zacks.com featured highlights include: Crocs, IAC/InterActive, Fortinet, Tandem Diabetes and Cross Country
For Immediate Release
Chicago, IL – August 7, 2019 - Stocks in this week’s article are Crocs Inc. CROX, IAC/InterActiveCorp IAC, Fortinet Inc. FTNT, Tandem Diabetes Care Inc. TNDM and Cross Country Healthcare Inc. CCRN.
5 Top-Ranked Stocks Primed for an Earnings Beat
All the uncertainty that hovers prior to the earnings release of a company stems from speculation over its beat potential. More than the comparison with previous results, it is a positive earnings surprise which drives the market post release. And since in any earnings season, both positive and negative surprises hit us, investors must always be looking keenly for stocks likely to post positive surprises or an earnings beat.
Why Is Earnings Surprise So Important?
Historically, stocks of companies with solid quarterly earnings (on a nominal basis) fall if they miss or just come in line with market expectations. After all, a 20% earnings rise (though it looks good apparently) doesn’t tell you if earnings growth has been exhibiting a decelerating trend. If that is the case, the company’s fundamentals are in serious question.
There is also the factor of seasonal fluctuation. If a company’s Q1 is seasonally weak and Q4 is strong, then it is likely to report a sequential earnings decline. In such a case, growth rates are ambiguous while judging the company’s true health.
On the other hand, Wall Street analysts study companies’ financials and initiatives to forecast earnings. They in fact club their insights and the company’s guidance to derive an earnings estimate. So, outperforming that estimate is almost equivalent to beating the company’s own expectation as well as market perception. And if the company manages to surpass earnings by a wide margin, it typically drives the stock higher right after the release.
Now, since it is hard to predict if a company will beat or miss in the upcoming earnings season, investors can check its earnings surprise history. A notable track record generally acts as a tailwind. It revs up chances of beating estimates in the next release too as investors expect the company to use the same old trick to come ahead of expectations, or is smart enough to pull off a beat in the next release.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/459535/5-topranked-stocks-primed-for-an-earnings-beat?art_rec=quote-stock_overview-zacks_news-ID04-txt-459535
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Fortinet, Inc. (FTNT) : Free Stock Analysis Report
IAC/InterActiveCorp (IAC) : Free Stock Analysis Report
Tandem Diabetes Care, Inc. (TNDM) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
Cross Country Healthcare, Inc. (CCRN) : Free Stock Analysis Report
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