4 of the Best Stocks That Boast Solid Earnings Growth
If a business doesn't make money, it certainly won't last in the long run. Hence, earnings growth is a top priority for any company's top brass.
Look at a company's revenue over time, subtract the cost of production and you have revenue. This metric is also seen as the most important variable influencing the stock price. But profit expectations also play an important role.
Earnings estimates and stock price movements
We have often seen a price decline despite earnings growth and a price increase after a profit decline. This is mainly due to the fact that a company's profits fall short of market expectations.
The earnings estimates reflect the analysts' views on factors such as sales growth, product demand, competitive industry environment, profit margins and cost control. Earnings estimates are therefore a valuable tool for making investment decisions. Earnings estimates also help analysts evaluate cash flow to determine a company's fair value.
Investors should therefore be on the lookout for stocks that are ready to take a big step. Therefore, it is important for investors to buy stocks that have historical earnings growth and that have also increased quarterly and yearly earnings estimates.
To shortlist stocks with notable earnings growth and positive estimates, we added the following parameters:
Zacks rank less than or equal to 2 (Only Zacks '' Buys '' and 'Strong Buys' are allowed. Since the Zacks rank is proving to be one of the best rating systems out there, this is a great way to get things started). )
5-year historical EPS growth (%) greater than X-Industry (stocks with a strong EPS growth history).
% Change in EPS F (0) / F (-1) greater than or equal to 5 (companies that posted earnings growth of 5% or more over the previous year in the last reported financial year).
% Change Q1 estimates greater than zero in the past 4 weeks (stocks whose current earnings estimates for the quarter were revised higher in the past 4 weeks).
% Change in F1 estimates greater than zero in the past week (stocks whose annual earnings estimates have been revised higher in the past week).
% Change in F1 estimates greater than zero in the past 4 weeks (stocks whose annual earnings estimates have been revised higher in the past 4 weeks).
The above criteria have narrowed the universe from around 7,839 stocks to just eight. Here are the four best stocks:
Americas CarMart, Inc. CRMT operates car dealerships and is one of the largest auto dealers in the United States. The company currently has a Zacks Rank 1 (Strong Buy). The company's expected earnings growth rates for the current year and next year are 34.4% and 9.4%, respectively. The full list of today's Zacks # 1 Rank stocks can be found here.
Best Buy Co., Inc. BBY is a multinational retailer of consumer electronics, home office products, and entertainment software, to name a few. The company currently has a Zacks Rank 2 (Buy). The company's expected earnings growth rate for the current year and next is nearly 18% and 2.5%, respectively.
IDEXX Laboratories, Inc. IDXX is the developer, manufacturer and distributor of products and services primarily intended for the animal, animal and poultry, water testing and dairy markets. The company currently has a Zacks Rank 2. The company's expected earnings growth rate for the current year and next year is 25.4% and 11.4%, respectively.
PerkinElmer, Inc. PKI provides scientific instruments, supplies, and services to the pharmaceutical, biomedical, environmental testing, chemical, and general industrial markets worldwide. The company is currently showing a Zacks Rank 1. The company's expected earnings growth rate for the current year and next year is 73.7% and nearly 9%, respectively.
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Disclosure: Zacks Investment Research officers, directors and / or employees may own or have sold short securities and / or hold long and / or short positions in options referred to in this material. An affiliate investment adviser may own or have sold short securities and / or hold long and / or short positions in options referred to in this material.
Disclosure: For performance information on Zacks' portfolios and strategies, please visit: https://www.zacks.com/performance
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Best Buy Co., Inc. (BBY): Free Stock Analysis Report
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