Why Endeavor (EDR) Could Beat Earnings Estimates Again
IIf you’re looking for a stock that has a solid track record of beating earnings estimates and is in a good position to hold the trend in its upcoming quarterly report, you should consider Endeavor Group (EDR). This company, part of Zacks Media’s conglomerate industry, shows potential for another earnings beat.
This entertainment, sports and content company has an established record of better earnings estimates, especially when looking at the previous two reports. The company claims an average surprise for the last two quarters of 92.31%.
Last quarter, Endeavor was expected to report earnings of $0.13 per share, but instead reported $0.34 per share, which is a surprise of 161.54%. For the previous quarter, the consensus estimate was $0.13 per share, when it actually produced $0.16 per share, a surprise of 23.08%.
Price and Surprise EPS
For Endeavour, estimates tend to rise, thanks in part to this surprise earnings story. And when you look at the stock’s positive Zacks Earnings ESP (Expected Surprise Prediction), it’s a great indicator of a future earnings pace, 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 of #3 (Hold) or better produce a positive surprise almost 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that exceeded 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 tied to change. The idea here is that analysts revising their estimates just before the earnings release have the latest information, which could potentially be more accurate than they and other consensus contributors predicted earlier.
Endeavor has an earnings ESP of +25.34% at the moment, suggesting analysts have become optimistic about its near-term earnings potential. When you combine this positive earnings ESP with the stock’s #1 Zacks rank (Strong Buy), it shows that another beat may be around the corner. The company’s next earnings report is scheduled for release on May 12, 2022.
When the ESP of earnings turns 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 loss of profit.
Many companies end up beating the consensus EPS estimate, but that may not be the only basis for their stock rally. On the other hand, some stocks may hold firm even if they end up missing the consensus estimate.
For this reason, it is really important to check a company’s earnings ESP before its quarterly release to increase the chances of success. Be sure to use our earnings ESP filter to discover the best stocks to buy or sell before they are released.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.