Author: Zacks Equity Research

MKTX – MarketAxess (MKTX) Is Up 2.12% in One Week: What You Should Know

Momentum investing is all about the idea of following a stock’s recent trend, which can be in either direction. In the ‘long’ context, investors will essentially be “buying high, but hoping to sell even higher.” And for investors following this methodology, taking advantage of trends in a stock’s price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.

Even though momentum is a popular stock characteristic, it can be tough to define. Debate surrounding which are the best and worst metrics to focus on is lengthy, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.

Below, we take a look at MarketAxess (MKTX Free Report) , which currently has a Momentum Style Score of A. We also discuss some of the main drivers of the Momentum Style Score, like price change and earnings estimate revisions.

It’s also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. MarketAxess currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.

You can see the current list of Zacks #1 Rank Stocks here >>>

Set to Beat the Market?

Let’s discuss some of the components of the Momentum Style Score for MKTX that show why this operator of bond trading platforms shows promise as a solid momentum pick.

A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and if buyers or sellers currently have the upper hand. It is also useful to compare a security to its industry, as this can help investors pinpoint the top companies in a particular area.

For MKTX, shares are up 2.12% over the past week while the Zacks Securities and Exchanges industry is up 0.07% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 30.36% compares favorably with the industry’s 2.45% performance as well.

While any stock can see a spike in price, it takes a real winner to consistently outperform the market. Shares of MarketAxess have increased 61.38% over the past quarter, and have gained 11.88% in the last year. In comparison, the S&P 500 has only moved 6.45% and -5.14%, respectively.

Investors should also pay attention to MKTX’s average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. MKTX is currently averaging 321,257 shares for the last 20 days.

Earnings Outlook

The Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock’s price movement. Investors should note that earnings estimates are also significant to the Zacks Rank, and a nice path here can be promising. We have recently been noticing this with MKTX.

Over the past two months, 5 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost MKTX’s consensus estimate, increasing from $7.63 to $7.79 in the past 60 days. Looking at the next fiscal year, 3 estimates have moved upwards while there have been 2 downward revisions in the same time period.

Bottom Line

Given these factors, it shouldn’t be surprising that MKTX is a #2 (Buy) stock and boasts a Momentum Score of A. If you’re looking for a fresh pick that’s set to soar in the near-term, make sure to keep MarketAxess on your short list.

KWR – Quaker Chemical (KWR) Moves to Strong Buy: Rationale Behind the Upgrade

Quaker Chemical (KWR Free Report) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This rating change essentially reflects an upward trend in earnings estimates — one of the most powerful forces impacting stock prices.

The Zacks rating relies solely on a company’s changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure — the Zacks Consensus Estimate.

The power of a changing earnings picture in determining near-term stock price movements makes the Zacks rating system highly useful for individual investors, since it can be difficult to make decisions based on rating upgrades by Wall Street analysts. These are mostly driven by subjective factors that are hard to see and measure in real time.

Therefore, the Zacks rating upgrade for Quaker Chemical basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.

Most Powerful Force Impacting Stock Prices

The change in a company’s future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. The influence of institutional investors has a partial contribution to this relationship, as these big professionals use earnings and earnings estimates to calculate the fair value of a company’s shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock.

Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for Quaker Chemical imply an improvement in the company’s underlying business. Investors should show their appreciation for this improving business trend by pushing the stock higher.

Harnessing the Power of Earnings Estimate Revisions

Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.

The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here >>>>.

Earnings Estimate Revisions for Quaker Chemical

For the fiscal year ending December 2022, this specialty chemical company is expected to earn $5.71 per share, which is a change of -16.6% from the year-ago reported number.

Analysts have been steadily raising their estimates for Quaker Chemical. Over the past three months, the Zacks Consensus Estimate for the company has increased 1.4%.

Bottom Line

Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of ‘buy’ and ‘sell’ ratings for its entire universe of more than 4000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a ‘Strong Buy’ rating and the next 15% get a ‘Buy’ rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.

You can learn more about the Zacks Rank here >>>

The upgrade of Quaker Chemical to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.

INCY – Incyte (INCY) is a Great Momentum Stock: Should You Buy?

Momentum investing is all about the idea of following a stock’s recent trend, which can be in either direction. In the ‘long’ context, investors will essentially be “buying high, but hoping to sell even higher.” And for investors following this methodology, taking advantage of trends in a stock’s price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.

Even though momentum is a popular stock characteristic, it can be tough to define. Debate surrounding which are the best and worst metrics to focus on is lengthy, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.

Below, we take a look at Incyte (INCY Free Report) , which currently has a Momentum Style Score of B. We also discuss some of the main drivers of the Momentum Style Score, like price change and earnings estimate revisions.

It’s also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Incyte currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.

You can see the current list of Zacks #1 Rank Stocks here >>>

Set to Beat the Market?

Let’s discuss some of the components of the Momentum Style Score for INCY that show why this specialty drugmaker shows promise as a solid momentum pick.

A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and if buyers or sellers currently have the upper hand. It is also useful to compare a security to its industry, as this can help investors pinpoint the top companies in a particular area.

For INCY, shares are up 2.93% over the past week while the Zacks Medical – Biomedical and Genetics industry is down 0.85% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 8.22% compares favorably with the industry’s 13.05% performance as well.

While any stock can see a spike in price, it takes a real winner to consistently outperform the market. Shares of Incyte have increased 11.85% over the past quarter, and have gained 20.14% in the last year. In comparison, the S&P 500 has only moved 6.45% and -5.14%, respectively.

Investors should also pay attention to INCY’s average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. INCY is currently averaging 1,682,644 shares for the last 20 days.

Earnings Outlook

The Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock’s price movement. Investors should note that earnings estimates are also significant to the Zacks Rank, and a nice path here can be promising. We have recently been noticing this with INCY.

Over the past two months, 1 earnings estimate moved higher compared to none lower for the full year. These revisions helped boost INCY’s consensus estimate, increasing from $2.73 to $2.74 in the past 60 days. Looking at the next fiscal year, 1 estimate has moved upwards while there have been no downward revisions in the same time period.

Bottom Line

Given these factors, it shouldn’t be surprising that INCY is a #2 (Buy) stock and boasts a Momentum Score of B. If you’re looking for a fresh pick that’s set to soar in the near-term, make sure to keep Incyte on your short list.

HAE – What Makes Haemonetics (HAE) a Strong Momentum Stock: Buy Now?

Momentum investing is all about the idea of following a stock’s recent trend, which can be in either direction. In the ‘long’ context, investors will essentially be “buying high, but hoping to sell even higher.” And for investors following this methodology, taking advantage of trends in a stock’s price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.

While many investors like to look for momentum in stocks, this can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.

Below, we take a look at Haemonetics (HAE Free Report) , which currently has a Momentum Style Score of B. We also discuss some of the main drivers of the Momentum Style Score, like price change and earnings estimate revisions.

It’s also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Haemonetics currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.

You can see the current list of Zacks #1 Rank Stocks here >>>

Set to Beat the Market?

Let’s discuss some of the components of the Momentum Style Score for HAE that show why this provider blood management systems for health care providers and blood collectors shows promise as a solid momentum pick.

Looking at a stock’s short-term price activity is a great way to gauge if it has momentum, since this can reflect both the current interest in a stock and if buyers or sellers have the upper hand at the moment. It is also useful to compare a security to its industry, as this can help investors pinpoint the top companies in a particular area.

For HAE, shares are up 4.21% over the past week while the Zacks Medical – Products industry is flat over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 11.39% compares favorably with the industry’s 7.51% performance as well.

While any stock can see its price increase, it takes a real winner to consistently beat the market. That is why looking at longer term price metrics — such as performance over the past three months or year — can be useful as well. Over the past quarter, shares of Haemonetics have risen 10.54%, and are up 100.82% in the last year. On the other hand, the S&P 500 has only moved 6.45% and -5.14%, respectively.

Investors should also take note of HAE’s average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. Right now, HAE is averaging 429,527 shares for the last 20 days.

Earnings Outlook

The Zacks Momentum Style Score also takes into account trends in estimate revisions, in addition to price changes. Please note that estimate revision trends remain at the core of Zacks Rank as well. A nice path here can help show promise, and we have recently been seeing that with HAE.

Over the past two months, 1 earnings estimate moved higher compared to none lower for the full year. These revisions helped boost HAE’s consensus estimate, increasing from $2.86 to $2.87 in the past 60 days. Looking at the next fiscal year, 1 estimate has moved upwards while there have been no downward revisions in the same time period.

Bottom Line

Taking into account all of these elements, it should come as no surprise that HAE is a #2 (Buy) stock with a Momentum Score of B. If you’ve been searching for a fresh pick that’s set to rise in the near-term, make sure to keep Haemonetics on your short list.

PGEN – Precigen, Inc. (PGEN) Moves to Buy: Rationale Behind the Upgrade

Precigen, Inc. (PGEN Free Report) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates — one of the most powerful forces impacting stock prices.

A company’s changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate — the consensus measure of EPS estimates from the sell-side analysts covering the stock — for the current and following years.

Individual investors often find it hard to make decisions based on rating upgrades by Wall Street analysts, since these are mostly driven by subjective factors that are hard to see and measure in real time. In these situations, the Zacks rating system comes in handy because of the power of a changing earnings picture in determining near-term stock price movements.

Therefore, the Zacks rating upgrade for Precigen, Inc. basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.

Most Powerful Force Impacting Stock Prices

The change in a company’s future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. The influence of institutional investors has a partial contribution to this relationship, as these big professionals use earnings and earnings estimates to calculate the fair value of a company’s shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock.

Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for Precigen, Inc. imply an improvement in the company’s underlying business. Investors should show their appreciation for this improving business trend by pushing the stock higher.

Harnessing the Power of Earnings Estimate Revisions

As empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, tracking such revisions for making an investment decision could be truly rewarding. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.

The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here >>>>.

Earnings Estimate Revisions for Precigen, Inc.

This company is expected to earn -$0.41 per share for the fiscal year ending December 2022, which represents a year-over-year change of 16.3%.

Analysts have been steadily raising their estimates for Precigen, Inc. Over the past three months, the Zacks Consensus Estimate for the company has increased 29.8%.

Bottom Line

Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of ‘buy’ and ‘sell’ ratings for its entire universe of more than 4000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a ‘Strong Buy’ rating and the next 15% get a ‘Buy’ rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.

You can learn more about the Zacks Rank here >>>

The upgrade of Precigen, Inc. to a Zacks Rank #2 positions it in the top 20% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.

NMIH – Why NMI Holdings (NMIH) Could Beat Earnings Estimates Again

Have you been searching for a stock that might be well-positioned to maintain its earnings-beat streak in its upcoming report? It is worth considering NMI Holdings (NMIH Free Report) , which belongs to the Zacks Insurance – Property and Casualty industry.

When looking at the last two reports, this mortgage insurance company has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 10.72%, on average, in the last two quarters.

For the last reported quarter, NMI Holdings came out with earnings of $0.90 per share versus the Zacks Consensus Estimate of $0.82 per share, representing a surprise of 9.76%. For the previous quarter, the company was expected to post earnings of $0.77 per share and it actually produced earnings of $0.86 per share, delivering a surprise of 11.69%.

Price and EPS Surprise

Thanks in part to this history, there has been a favorable change in earnings estimates for NMI Holdings lately. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the stock is positive, which is a great indicator of an earnings beat, particularly when combined with its solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

NMI Holdings has an Earnings ESP of +2.33% at the moment, suggesting that analysts have grown bullish on its near-term earnings potential. When you combine this positive Earnings ESP with the stock’s Zacks Rank #3 (Hold), it shows that another beat is possibly around the corner. The company’s next earnings report is expected to be released on February 14, 2023.

With the Earnings ESP metric, it’s important to note that a negative value reduces its predictive power; however, a negative Earnings ESP does not indicate an earnings miss.

Many companies end up beating the consensus EPS estimate, but that may not be the sole basis for their stocks moving higher. On the other hand, some stocks may hold their ground even if they end up missing the consensus estimate.

Because of this, it’s really important to check a company’s Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they’ve reported.

AEP – Why AEP (AEP) Could Beat Earnings Estimates Again

Have you been searching for a stock that might be well-positioned to maintain its earnings-beat streak in its upcoming report? It is worth considering American Electric Power (AEP Free Report) , which belongs to the Zacks Utility – Electric Power industry.

When looking at the last two reports, this utility has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 2.44%, on average, in the last two quarters.

For the last reported quarter, AEP came out with earnings of $1.62 per share versus the Zacks Consensus Estimate of $1.57 per share, representing a surprise of 3.18%. For the previous quarter, the company was expected to post earnings of $1.18 per share and it actually produced earnings of $1.20 per share, delivering a surprise of 1.69%.

Price and EPS Surprise

Thanks in part to this history, there has been a favorable change in earnings estimates for AEP lately. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the stock is positive, which is a great indicator of an earnings beat, particularly when combined with its solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

AEP has an Earnings ESP of +1.94% at the moment, suggesting that analysts have grown bullish on its near-term earnings potential. When you combine this positive Earnings ESP with the stock’s Zacks Rank #3 (Hold), it shows that another beat is possibly around the corner. The company’s next earnings report is expected to be released on February 23, 2023.

With the Earnings ESP metric, it’s important to note that a negative value reduces its predictive power; however, a negative Earnings ESP does not indicate an earnings miss.

Many companies end up beating the consensus EPS estimate, but that may not be the sole basis for their stocks moving higher. On the other hand, some stocks may hold their ground even if they end up missing the consensus estimate.

Because of this, it’s really important to check a company’s Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they’ve reported.

OGN – Will Organon (OGN) Beat Estimates Again in Its Next Earnings Report?

Have you been searching for a stock that might be well-positioned to maintain its earnings-beat streak in its upcoming report? It is worth considering Organon (OGN Free Report) , which belongs to the Zacks Medical Services industry.

This pharmaceutical company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. The average surprise for the last two quarters was 12.81%.

For the most recent quarter, Organon was expected to post earnings of $1.12 per share, but it reported $1.32 per share instead, representing a surprise of 17.86%. For the previous quarter, the consensus estimate was $1.16 per share, while it actually produced $1.25 per share, a surprise of 7.76%.

Price and EPS Surprise

With this earnings history in mind, recent estimates have been moving higher for Organon. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the company is positive, which is a great sign of an earnings beat, especially when you combine this metric with its nice Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Organon has an Earnings ESP of +25.28% at the moment, suggesting that analysts have grown bullish on its near-term earnings potential. When you combine this positive Earnings ESP with the stock’s Zacks Rank #3 (Hold), it shows that another beat is possibly around the corner.

Investors should note, however, that a negative Earnings ESP reading is not indicative of an earnings miss, but a negative value does reduce the predictive power of this metric.

Many companies end up beating the consensus EPS estimate, but that may not be the sole basis for their stocks moving higher. On the other hand, some stocks may hold their ground even if they end up missing the consensus estimate.

Because of this, it’s really important to check a company’s Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they’ve reported.

REGN – Why Regeneron (REGN) is Poised to Beat Earnings Estimates Again

Have you been searching for a stock that might be well-positioned to maintain its earnings-beat streak in its upcoming report? It is worth considering Regeneron (REGN Free Report) , which belongs to the Zacks Medical – Biomedical and Genetics industry.

This biopharmaceutical company has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for the past two quarters of 14.69%.

For the last reported quarter, Regeneron came out with earnings of $11.14 per share versus the Zacks Consensus Estimate of $9.70 per share, representing a surprise of 14.85%. For the previous quarter, the company was expected to post earnings of $8.53 per share and it actually produced earnings of $9.77 per share, delivering a surprise of 14.54%.

Price and EPS Surprise

For Regeneron, estimates have been trending higher, thanks in part to this earnings surprise history. And when you look at the stock’s positive Zacks Earnings ESP (Expected Surprise Prediction), it’s a great indicator of a future earnings beat, especially when combined with its solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Regeneron has an Earnings ESP of +4.30% at the moment, suggesting that analysts have grown bullish on its near-term earnings potential. When you combine this positive Earnings ESP with the stock’s Zacks Rank #3 (Hold), it shows that another beat is possibly around the corner. The company’s next earnings report is expected to be released on February 3, 2023.

When the Earnings ESP comes up negative, investors should note that this will reduce the predictive power of the metric. But, a negative value is not indicative of a stock’s earnings miss.

Many companies end up beating the consensus EPS estimate, but that may not be the sole basis for their stocks moving higher. On the other hand, some stocks may hold their ground even if they end up missing the consensus estimate.

Because of this, it’s really important to check a company’s Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they’ve reported.

AXP – American Express (AXP) Misses Q4 Earnings and Revenue Estimates

American Express (AXP Free Report) came out with quarterly earnings of $2.07 per share, missing the Zacks Consensus Estimate of $2.18 per share. This compares to earnings of $2.18 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -5.05%. A quarter ago, it was expected that this credit card issuer and global payments company would post earnings of $2.42 per share when it actually produced earnings of $2.47, delivering a surprise of 2.07%.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

American Express, which belongs to the Zacks Financial – Miscellaneous Services industry, posted revenues of $14.18 billion for the quarter ended December 2022, missing the Zacks Consensus Estimate by 0.49%. This compares to year-ago revenues of $12.15 billion. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.

American Express shares have added about 5.5% since the beginning of the year versus the S&P 500’s gain of 5.8%.

What’s Next for American Express?

While American Express has underperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for American Express: unfavorable. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $2.64 on $13.78 billion in revenues for the coming quarter and $10.62 on $59.19 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial – Miscellaneous Services is currently in the top 39% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Intercorp Financial Services Inc. (IFS Free Report) , has yet to report results for the quarter ended December 2022.

This company is expected to post quarterly earnings of $1.04 per share in its upcoming report, which represents a year-over-year change of +85.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Intercorp Financial Services Inc.’s revenues are expected to be $384.75 million, up 51.7% from the year-ago quarter.