Study a company’s 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’t make money, it won’t last long.

By the way, this is also considered the most critical variable influencing the share price. But expectations of earnings play a noteworthy role.

Earnings Estimates & Share Price Movements

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’s earnings failing to meet market expectations.

Earnings estimates embody analysts’ 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.

Earnings estimates also help analysts assess the cash flow to determine the fair value of a firm.

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.

Screening Measures:

To shortlist stocks that have striking earnings growth and positive estimate revisions, we have added the following parameters:

Zacks Rank less than or equal to 2 (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.)

5-Year Historical EPS Growth (%) greater than X-Industry (stocks with a strong EPS growth history).

% Change EPS F(0)/F(-1) greater than or equal to 5 (companies that saw year-over-year earnings growth of 5% or more in the last reported fiscal).

% Change Q1 Estimates over the last 4 weeks greater than zero (stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks).

% Change F1 Estimates over the last 1 week greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 1 week).

% Change F1 Estimates over the last 4 weeks greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 4 weeks).

The above criteria narrowed the universe of around 7,839 stocks to only 32. Here are the top five stocks that stand out:

Inter Parfums 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’s expected earnings growth rate for the current year is 13.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MercadoLibre MELI is one of the largest e-commerce platforms in South America. The company has a Zacks Rank #2. MELI’s expected earnings growth rate for the current year is 102%.

Modine Manufacturing 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’s expected earnings growth rate for the current year is 39.5%.

AMETEK AME is one of the leading manufacturers of electronic appliances and electromechanical devices. The company has a Zacks Rank #2. AME’s expected earnings growth rate for the current year is 9.7%.

RLI 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’s expected earnings growth rate for the current year is 8.3%.
RLI Corp. (RLI): Free Stock Analysis Report

AMETEK, Inc. (AME): Free Stock Analysis Report

Inter Parfums, Inc. (IPAR): Free Stock Analysis Report

MercadoLibre, Inc. (MELI): Free Stock Analysis Report

Modine Manufacturing Company (MOD): Free Stock Analysis Report

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