4 Stocks Packed With The Power Of Earnings Growth

Earnings are basically revenues that the company generates after deducting the cost of production over a given period of time. Regardless of the fact whether it is a fledgling company or an established corporation, consistent earnings growth is what everyone looks for. And why not? If the company doesn’t make money then it won’t last in the long run and will eventually run out of steam.

This metric is also considered to be the most significant variable in influencing the share price. Better-than-expected earnings performances normally lead to a rally in the share price. In addition to actual earnings, expectations of earnings also play a significant role in influencing the price of a stock.

Earnings Estimates & Share Prices

We have often seen a decline in the stock price despite earnings growth and a rally in the price following an earnings decline. This is largely a result of a company’s earnings failing to meet market expectations.

So, what are earnings estimates? Earnings estimates embody analysts’ opinions of factors such as sales growth, product demand, competitive industry environment, profit margins and cost controls. Thus, earnings estimates are a valuable tool for investors. Analysts can also examine the cash flow based on these periodic earnings estimates to determine the fair value of the company.

Here, we have picked stocks that have displayed historical earnings growth and are also seeing a rise in quarterly and annual earnings estimates.

Screening Parameters

In order to shortlist stocks that have striking earnings growth and are witnessing positive estimate revisions, we added the following parameters:

Zacks Rank less than or equal to 2: Only Zacks Rank #1 (Strong Buy) and 2 (Buy) stocks 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long ...

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