For Immediate Release
Chicago, IL – August 26, 2016 - Stocks in this week’s article include: ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA), Urban Outfitters Inc (NASDAQ:URBN). (URBN), SkyWest Inc. (SKYW), NetEase, Inc. ( NTES) and Dycom Industries Inc. (DY).
Screen of the Week of Zacks Investment Research:
Top 5 Stocks with Stellar Earnings Growth
Take a company’s revenue over a given period of time, subtract the cost of production and, there it is, you have earnings! In short, earnings serve as a major indicator of a company’s profitability and thus securing earnings growth on a year-over-year basis is the highest priority among the top brass of any organization, be it a fledgling company or an established corporation.
This metric is also considered to be the most significant variable in influencing the share price. Also, earnings expectations play a crucial role in share price movements.
How Do Earnings Estimates Determine Share Prices?
On numerous occasions, companies have seen their share prices decline even after reporting earnings growth or for that matter a stock price surging following an earnings decline. This follows the missing or beating of estimates.
But what exactly do earnings estimates represent? These are analysts’ expectations of a company’s quarterly or annual earnings, which represent their opinion on factors such as sales growth, product demand, competitive industry environment, profit margins, expenses and cost control. Thus, earnings estimates are a valuable tool for making investment choices.
Thus, it is imperative for an investor to zero down to stocks with solid earnings growth and escalating earnings estimates. Moreover, earnings estimates help analysts to use cash flow analysis to determine the fair value of a firm.
We have picked stocks that have displayed historical earnings growth and are also seeing a rise in quarterly and annual earnings estimates.
The Winning Strategy
In order to shortlist stocks that have striking earnings growth and positive estimate revisions, we 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 that possess strong EPS growth history.)
% Change EPS F(0)/F(-1) greater than or equal to 5 (Companies that witnessed year-over-year earnings growth rate 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 down the universe of around 7,720 stocks to only 11. Here are the top 5 stocks:
ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA) operates as a specialty retailer in the United States. Its stores provide cosmetics, fragrance, haircare, skincare, bath and body products, and salon styling tools. The company’s estimated earnings growth rate for this year is 23.5%.
Urban Outfitters Inc. (URBN) is a lifestyle specialty retail company that engages in the retail and wholesale of general consumer products. The company’s estimated earnings growth rate for this year stands at 16.1%.
SkyWest Inc. (SKYW), through its subsidiaries, operates a regional airline in the United States. The company’s estimated earnings growth rate for this year is pegged at 33.8%.
NetEase, Inc. (NTES) operates an interactive online community in the Peoples Republic of China. The company has Online Game Services; Advertising Services; and E-mail, E-commerce and Others segments. NetEase’s estimated earnings growth rate for this year is 45.6%.
Dycom Industries Inc. (DY) provides specialty contracting services in the United States and Canada. The company’s estimated earnings growth rate for this year stands at 17.4%.
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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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ULTA SALON COSM (ULTA): Free Stock Analysis Report
SKYWEST INC (SKYW): Free Stock Analysis Report
NETEASE INC (NTES): Free Stock Analysis Report
DYCOM INDS (DY): Free Stock Analysis Report
URBAN OUTFITTER (URBN): Free Stock Analysis Report
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