Are you interested in finding a stock that consistently exceeds earnings expectations and could continue to do so in its upcoming quarterly report? Consider looking at Shopify (SHOP), a company in the Zacks Internet – Services industry.
In the past two reports, this company that operates in cloud-based commerce has consistently outperformed expectations, with an average of exceeding estimates by 34.84% in the last two quarters.
During Shopify's most recent quarter, it was predicted to have earnings of $0.31 per share, but it actually reported earnings of $0.34 per share, which was a surprise of 9.68%. In the quarter before that, the estimated earnings were $0.15 per share, but Shopify exceeded expectations by reporting earnings of $0.24 per share, which was a surprise of 60%.
Shopify has been experiencing an increase in estimated earnings, partly due to its history of surprising earnings. With a positive Zacks Earnings ESP and a solid Zacks Rank, the company is likely to exceed earnings expectations in the future. This combination serves as a strong indicator of potential success in upcoming earnings reports.
Based on our research, stocks that have both a positive Earnings ESP and a Zacks Rank #3 (Hold) or better tend to surprise positively around 70% of the time. In simpler terms, if you hold 10 stocks with this combination, it's likely that up to seven of them could surpass the consensus estimate.
The Zacks Earnings ESP compares the Most Accurate Estimate with the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a modified version of the Zacks Consensus based on recent changes. The rationale behind this is that analysts adjusting their estimates right before an earnings announcement have the most up-to-date information, potentially increasing the accuracy compared to earlier predictions by themselves and others involved in the consensus.
Shopify currently has an Earnings ESP of +19.82%, indicating optimism from analysts regarding its potential for earnings in the near future. With this strong Earnings ESP and a Zacks Rank #3 (Hold), there is a possibility of the company surpassing expectations in its upcoming earnings report, expected to be disclosed on May 8, 2024.
It is important for investors to understand that a negative Earnings ESP reading doesn't necessarily mean that there will be an earnings miss. However, having a negative value does decrease the reliability of this metric in predicting future earnings performance.
Numerous companies often exceed the predicted earnings per share (EPS) estimate, but this is not the sole reason for an increase in their stock value. It is possible for some stocks to remain steady even if they fall short of the consensus estimate.
<p>Within a paragraph, there's a button classified as a finance read more button which when clicked reveals more content of the story. This button is labeled as "Story continues."</p>
Additional part of the story is presented here.
It is important to check a company's Earnings ESP before its quarterly release to improve the chances of success. Utilize the Earnings ESP Filter to find the best stocks to buy or sell before their earnings reports are released.
Receive the most recent recommendations from Zacks Investment Research by downloading the 7 Best Stocks for the Next 30 Days today. Simply click to access this complimentary report.
Shopify Inc. offers a Free Stock Analysis Report.
You can access the complete article on Zacks.com by clicking here.
Zacks Investment Research is a financial research company that provides analysis and insights on various investment opportunities.
