If you’re looking for stocks that have a solid track record of exceeding expectations and are well-positioned to sustain the trend in your next quarterly report, look no further than Norfolk Southern (Nippon Steel – free report). Zacks Transportation – This company in the Rail industry presents another potential earning potential.
The railroad has an established record of exceeding revenue estimates, especially if you look at the previous two reports. The company boasts an average surprise rate of his 6.46% over the past two quarters.
In the most recent quarter, Norfolk Southern was expected to post earnings of $3.64 per share, but instead reported $4.10 per share, representing a surprise 12.64%. Consensus forecast last quarter was $3.44 per share, but it actually turned out to be $3.45 per share, a surprise of 0.29%.
Price and EPS Surprise
With this earnings history in mind, Norfolk Southern’s recent estimates are up. 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.
Norfolk Southern’s current earnings ESP is +1.42%. 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. The company’s next earnings report is expected to be released on January 25, 2023.
It is important to note that in the Earnings ESP metric, negative values decrease predictive power. However, a negative Earnings ESP does not indicate Earnings Miss.
Many companies ended up beating consensus EPS estimates, but that’s not the only reason stocks are rising. Additionally, some stocks may remain stable even if they end up below consensus expectations.
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.