Earnings growth is essential for organizations of all sizes because sustained profitability is key to survival. To calculate earnings, examine a company’s revenues over a certain period and subtract the production costs. A company’s earnings have a significant influence on its share price, with earnings expectations playing a key role in determining market performance.
Against this backdrop, NVIDIA Corporation NVDA, Neurocrine Biosciences, Inc. NBIX and Ball Corporation BALL are delivering strong and impressive earnings growth, making them compelling investment opportunities for the second half of this year.
Earnings Estimates & Share Price Movements
We have frequently seen stock prices decline despite earnings growth or rally after an earnings decline. This is largely the result of a company’s earnings failing to meet market expectations.
Earnings estimates reflect analysts’ views on factors such as sales growth, product demand, the competitive industry environment, profit margins, and cost control. Consequently, earnings estimates are a valuable tool for making investment decisions. They also help analysts evaluate cash flow to determine a firm’s fair value.
Thus, investors should be on the lookout for stocks ready to make a big move. Such stocks should have a history of earnings growth and rising quarterly and annual earnings estimates.
Research Wizard: Your Shortcut to Finding Winning Stocks
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 24. Here are the top three stocks:
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