Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

Do Positive EPS And Revenue Revisions Always Mean Higher Stock Prices?

Published 01/28/2021, 12:48 AM
Updated 07/09/2023, 06:31 AM

In a word, “no.”

Just look at Financials after their mostly “upside surprise” EPS beat rates.

Here is the latest week’s spreadsheet on EPS revisions within the Financial sector:

Financial Sector Estimated EPS Growth

Check the improvement in the Financial sector’s expected EPS growth through 2021.

What’s impressive is that even as of last Friday, January 22, 2021, the forward quarters keep getting revised higher.

However since Jan. 1, and probably thanks to a fourth quarter rally in many of these names, a lot of Financial stocks are down hard:

  • JPMorgan Chase (NYSE:JPM) is down from $142.75 prior to earnings to yesterday’s $127.86;
  • Schwab (NYSE:SCHW) is down from $62.04 prior to earnings to yesterday’s $53;
  • Goldman Sachs (NYSE:GS) is down from $309 prior to earnings to yesterday’s $273;
  • Morgan Stanley (NYSE:MS) is down from $77 prior to earnings to yesterday’s $68;
  • Bank of America (NYSE:BAC) is down from $34.37 to yesterday’s close at $29.83

That’s just a few of the big caps.

Most of these financials are testing or about to test their 50-day moving averages, after substantial 4th quarter rallies.

Summary / conclusion: Like the old saying, “the fastest runner doesn’t always win the race, but that’s often a good way to bet,” upward revisions to EPS and revenue growth for individual stocks and a sector can often be a winning strategy over a bull market.

Earnings revisions are not always a good timing tool, as the Financial sector shows since earnings releases began mid-January ’21. Both JPM and Schwab have seen continued upward EPS and revenue revisions (as has Goldman) but the stocks have sold off. (Long all three in client accounts.)

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Readers will be kept posted here on occasion.

Take everything you read both here and on any site with skepticism. Make your financial decisions in light of your own risk appetite and financial profile. This site aims to keep readers updated but it can be delayed and the markets will always move faster than the data.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.