Looking for a stock that consistently beats earnings expectations and could sustain this momentum in your next quarterly report? Hess (He – Free Report) belongs to the Zacks Oil and Gas – Integrated – United States industry and could be a good candidate to consider.
This oil and gas producer has an established record of exceeding earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise rate of 2.20% for the last two quarters.
In the most recent quarter, Hess was expected to post earnings of $1.88 per share, but instead reported $1.89 per share, representing a surprise 0.53%. Last quarter the consensus expected him to be $2.07 a share, but in reality he was $2.15 a share, a surprise of 3.86%.
Price and EPS Surprise
With this earnings history in mind, recent estimates have moved higher for Hess. In fact, the company’s Zacks Earnings ESP (Expected Surprise Prediction) is positive, indicating improved earnings, especially when this metric is combined with the excellent Zacks Rank.
According to our research, stocks with a combination of positive Earnings ESP and Zacks Rank 3 (Hold) or higher deliver a positive surprise almost 70% of the time. In other words, if there are 10 stocks in this combination, there could be as many as 7 stocks above the consensus estimate.
Zacks Earnings ESP compares the most accurate estimate to the quarterly Zacks Consensus estimate. The Most Accurate Estimate is a version of the Zacks Consensus, whose definitions are subject to change. The idea here is that analysts who revise their estimates just before the earnings release have the most up-to-date information. This may be more accurate than previously predicted by analysts and others contributing to the consensus.
Hess’ current earnings ESP is +2.05%. This suggests that analysts have recently become bullish about the company’s earnings outlook. Combined with the stock’s Zacks Rank 3 (Hold), this positive earnings ESP suggests another beat is likely around the corner.
If the Earnings ESP turns negative, investors should be aware that this reduces the predictive power of the indicator. However, a negative value does not indicate a loss of earnings for the stock.
Many companies ended up beating consensus EPS estimates, but that may not be the only reason stocks are rising. On the other hand, some stocks may retain their position even if they ultimately miss the consensus estimate.
For this reason, it is very important to review your company’s revenue ESP prior to each quarterly release to increase your chances of success. Use the Earnings ESP Filter to find the best stocks to buy or sell before they’re reported.
