Are you looking for a stock that has consistently exceeded earnings expectations and may be well positioned to keep the streak alive in the next quarterly report? Beacon Roofing Supply (BECN – Free Report), which belongs to Zacks Building Products – Retail industry, could be a good candidate to consider.
This roofing materials distributor has seen a nice set of profit expectations, especially when we look at the previous two reports. The average surprise for the last two quarters was 35.60%.
For the last quarter reported, Beacon Roofing came in with earnings of $ 0.92 per share versus the Zacks Consensus Estimate of $ 0.64 per share, representing a surprise 43.75%. For the previous quarter, the company was expected to post a profit of $ 1.02 per share and even produced a profit of $ 1.30 per share, yielding a surprise of 27.45%.
Price and EPS surprise
Partly thanks to this history, there has been a favorable change in earnings expectations for Beacon Roofing recently. In fact, the stock’s Zacks Earnings ESP (Expected Surprise Prediction) is positive, which is a good indicator of better earnings, 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 deliver a positive surprise almost 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 much 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 who revise their estimates just before a profit is announced will have the latest information, which could potentially be more accurate than what they and others who contributed to the consensus previously predicted.
Beacon Roofing currently has an earnings ESP of + 499.97%, suggesting that analysts have become optimistic about its near-term earnings potential. Combining this positive Earnings ESP with the stock’s Zacks Rank # 3 (Hold) shows that there may be another beat around the corner.
When the Earnings ESP turns negative, investors should be aware that it will reduce the predictive power of the metric. But a negative value is not indicative of a stock’s missing out on earnings.
Many companies exceed the consensus EPS estimate, although this is not the only reason their stocks are gaining. In addition, some stocks can remain stable even if they fall short of the consensus estimate.
That’s why it’s very important to check a company’s Earnings ESP before the quarter is released to increase the odds of success. Make sure to use our Earnings ESP filter to find the best stocks to buy or sell before they sign up.
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