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Zacks.com featured highlights include: IAC/InterActiveCorp, Tactile Systems Technology, Martin Marietta Materials, Fortinet and Intuit

Zacks Equity Research

For Immediate Release

Chicago, IL – May 20, 2019 - Stocks in this week’s article are IAC/InterActiveCorp IAC, Tactile Systems Technology Inc. TCMD, Martin Marietta Materials Inc. MLM, Fortinet Inc. FTNT and Intuit Inc. INTU.

These 5 Top Stocks May Surprise You with an Earnings Beat

Just earnings growth is not enough to keep investors happy these days. A positive earnings surprise or a “BEAT” is what matters, irrespective of earnings growth. A positive earnings surprise or earnings beat is typically the case when actual or reported earnings come in above the consensus estimate.

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.

Seasonal fluctuations also 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.

It’s only after significant research and analysis on a company’s financials and initiatives that 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. 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?

Investors tend to look for stocks that have the potential to beat on the bottom line but might not always succeed. One way of identifying the winners beforehand is by looking at the earnings surprise history of a company.

An impressive track record in this regard generally acts as a driver. It indicates the company’s ability to exceed estimates. 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/415437/these-5-top-stocks-may-surprise-you-with-an-earnings-beat

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

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