Study a company\u2019s revenues over a given period, subtract the production cost, and you have earnings. Irrespective of whether it is a start-up or a well-known company, earnings growth is the main priority for any organization. This is because if the company doesn\u2019t make money, it won\u2019t last long.<\/p>\n
By the way, this is also considered the most critical variable influencing the share price. But expectations of earnings play a noteworthy role.<\/p>\n
Earnings Estimates & Share Price Movements<\/p>\n
Frequently, we have seen a decline in the stock price despite earnings growth and a rally in price following an earnings decline. This is essentially the result of a company\u2019s earnings failing to meet market expectations.<\/p>\n
Earnings estimates embody analysts\u2019 opinions on factors such as sales growth, product demand, competitive industry environment, profit margins, and cost control. Thus, earnings estimates serve as a valuable tool, while making investment decisions.<\/p>\n
Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.<\/p>\n
Thus, investors should be on the lookout for stocks ready to make a big move. Hence, investors need to buy stocks with historical earnings growth and are seeing a rise in quarterly and annual earnings estimates.<\/p>\n
Screening Measures:<\/p>\n
To shortlist stocks that have striking earnings growth and positive estimate revisions, we have added the following parameters:<\/p>\n
Zacks Rank less than or equal to 2<\/strong> (Only Zacks’ ‘Buys’ and ‘Strong Buys’ are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.)<\/p>\n 5-Year Historical EPS Growth (%) greater than X-Industry<\/strong> (stocks with a strong EPS growth history).<\/p>\n % Change EPS F(0)\/F(-1) greater than or equal to 5<\/strong> (companies that saw year-over-year earnings growth of 5% or more in the last reported fiscal).<\/p>\n % Change Q1 Estimates over the last 4 weeks greater than zero<\/strong> (stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks).<\/p>\n % Change F1 Estimates over the last 1 week greater than zero<\/strong> (stocks that have seen their annual earnings estimates revised higher in the last 1 week).<\/p>\n % Change F1 Estimates over the last 4 weeks greater than zero<\/strong> (stocks that have seen their annual earnings estimates revised higher in the last 4 weeks).<\/p>\n The above criteria narrowed the universe of around 7,839 stocks to only 32. Here are the top five stocks that stand out:<\/p>\n Inter Parfums<\/strong> IPAR is engaged in manufacturing, distributing and marketing a wide range of fragrances and related products. The company has a Zacks Rank #2 (Buy). IPAR\u2019s expected earnings growth rate for the current year is 13.4%. You can see the complete list of today\u2019s Zacks #1 Rank (Strong Buy) stocks here.<\/p>\n MercadoLibre<\/strong> MELI is one of the largest e-commerce platforms in South America. The company has a Zacks Rank #2. MELI\u2019s expected earnings growth rate for the current year is 102%.<\/p>\n Modine Manufacturing<\/strong> MOD operates primarily in a single industry consisting of the manufacture and sale of heat transfer equipment. The company has a Zacks Rank #1. MOD\u2019s expected earnings growth rate for the current year is 39.5%.<\/p>\n AMETEK <\/strong>AME is one of the leading manufacturers of electronic appliances and electromechanical devices. The company has a Zacks Rank #2. AME\u2019s expected earnings growth rate for the current year is 9.7%.<\/p>\n RLI <\/strong>RLI is a specialty property-casualty underwriter that caters primarily to niche markets through its main operating subsidiary, RLI Insurance Company. The company has a Zacks Rank #1. RLI\u2019s expected earnings growth rate for the current year is 8.3%. AMETEK, Inc. (AME): Free Stock Analysis Report<\/p>\n Inter Parfums, Inc. (IPAR): Free Stock Analysis Report<\/p>\n MercadoLibre, Inc. (MELI): Free Stock Analysis Report<\/p>\n Modine Manufacturing Company (MOD): Free Stock Analysis Report<\/p>\n To read this article on Zacks.com click here.<\/p>\n Zacks Investment Research<\/p>\n This article originally appeared on Zacks<\/i><\/p>\n Sponsored: Find a Qualified Financial Advisor<\/b><\/p>\n Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.<\/p>\n
\nRLI Corp. (RLI): Free Stock Analysis Report<\/p>\n