Jhe market expects Astronics Corporation (ATRO) to report an increase in year-over-year profits on the back of higher revenues when it reports results for the quarter ending March 2022. This consensus outlook widely known is important in assessing a company’s earnings picture, but a powerful factor that could influence its short-term course is how actual results compare to those estimates.
The earnings report, which is expected to be released on May 6, 2022, could help the stock rise if these key numbers come in better than expected. On the other hand, if they are missing, the stock may go down.
While the sustainability of the immediate price move and future earnings expectations will depend primarily on management discussing trading conditions on the earnings call, it is worth handicapping the likelihood of a positive surprise from the EPS.
Zacks consensus estimate
This company is expected to post a quarterly loss of $0.22 per share in its next report, representing a year-over-year change of +43.6%.
Revenue is expected to be $117.52 million, up 11% from the prior year quarter.
Trend of estimate revisions
The consensus EPS estimate for the quarter has been revised down 12.5% in the past 30 days from the current level. This essentially reflects how the covering analysts have collectively reassessed their initial estimates over this period.
Investors should keep in mind that an overall change may not always reflect the direction of revisions to estimates by each of the analysts involved.
Price, Consensus and EPS Surprise
Estimate revisions prior to a company’s earnings release provide clues to business conditions for the period for which earnings are released. Our proprietary surprise prediction model — the Zacks ESP Earnings (Expected Surprise Prediction) – has this idea at its core.
The Zacks Earnings ESP compares the most accurate estimate to the Zacks consensus estimate for the quarter; the most accurate estimate is a more recent version of the Zacks Consensus EPS estimate. 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.
Thus, a positive or negative reading of the ESP on earnings theoretically indicates the likely deviation of actual earnings from the consensus estimate. However, the predictive power of the model is only significant for positive ESP readings.
A positive earnings ESP is a good predictor of an earnings beat, especially when combined with a Zacks rank of #1 (strong buy), 2 (buy), or 3 (hold). Our research shows that stocks with this combination produce a positive surprise almost 70% of the timeand a strong Zacks ranking actually increases the predictive power of Earnings ESP.
Please note that a negative ESP reading on earnings is not indicative of a shortfall. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative ESP readings on earnings and/or a Zacks rating of 4 (sell) or 5 (strong sell).
How have the numbers evolved for Astronics Corporation?
For Astronics Corporation, the most accurate estimate is the same as the Zacks consensus estimate, suggesting that there are no recent analyst opinions that differ from what was considered to derive the estimate. consensus estimate. This resulted in an ESP on gains of 0%.
On the other hand, the stock currently carries a Zacks rank of #4.
Thus, this combination makes it difficult to conclusively predict that Astronics Corporation will exceed the consensus EPS estimate.
Does the history of the earnings surprise contain a clue?
When calculating estimates of a company’s future earnings, analysts often look at how closely it may have matched past consensus estimates. It is therefore worth taking a look at the surprise history to assess its influence on the number to come.
For the last reported quarter, Astronics Corporation was expected to post a loss of $0.09 per share when it actually produced a loss of $0.28, offering a surprise of -211.11 %.
The company has been unable to beat consensus EPS estimates for the past four quarters.
A beat or failure in earnings may not be the only basis for a stock to move higher or lower. Many stocks end up losing ground despite declining earnings due to other factors that disappoint investors. Similarly, unexpected catalysts help a number of stocks gain despite a shortfall.
That said, betting on stocks that are expected to exceed earnings expectations increases the odds of success. That’s why it’s worth checking a company’s ESP earnings and Zacks ranking before it’s quarterly release. Be sure to use our Income ESP Filter to discover the best stocks to buy or sell before they are released.
Astronics Corporation doesn’t seem like a compelling contender when it comes to earnings. However, investors should also pay attention to other factors to bet on this stock or walk away from it before its results are released.
Stay up to date with upcoming results announcements with the Zacks Earnings Schedule.
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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.