Why USA Technologies (USAT) is poised to beat earnings estimates again

Are you looking for a stock that has consistently beaten earnings estimates and could be well-positioned to continue that streak in the next quarterly report? USA Technologies (USAT), which belongs to the Zacks Computer – Integrated Systems industry, could be a great candidate to consider.

This electronic payments and wireless networking company has a strong track record of achieving top earnings estimates, especially considering its two previous reports. The company boasts an average surprise of 200% for the last two quarters.

USA Technologies was expected to report earnings of $0.01 per share for the most recent quarter, but instead reported earnings of $0.04 per share, representing a surprise of 300%. The consensus estimate for the prior quarter was $0.01 per share when it actually delivered $0.02 per share, which is a 100% surprise.

Price and EPS surprise

With this earnings history in mind, recent estimates for USA Technologies are getting higher. In fact, the company’s Zacks Earnings ESP (expected surprise) is positive, which is a great sign of earnings growth, especially when you combine this metric with a 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 in this combination, the number of stocks that beat the consensus could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimates to the Zacks Consensus Estimates for the quarter; The Most Accurate Estimate is the Zacks Consensus version, which is defined in terms of change. The idea is that analysts reviewing their estimates just before an earnings release have the latest information that could potentially be more accurate than what they and other consensus participants had previously predicted.

Right now, USA Technologies Earnings ESP is +300%, which suggests analysts have become optimistic about its near-term earnings potential. When you combine this positive Earnings ESP with the stock’s Zacks Rank #3 (Hold), it shows that another rally is likely just around the corner. The company’s next earnings report is expected to be released on September 11, 2018.

When earnings ESP turns negative, investors should remember that this will reduce the predictive power of this metric. However, a negative value does not indicate a company’s lack of profits.

Many companies end up beating consensus EPS estimates, though that’s not the only reason their shares rise. Additionally, some stocks may remain stable even if they fall short of consensus estimates.

For this reason, it is very important to check a company’s earnings ESP before its quarterly release to increase the chances of success. Use our Earnings ESP filter to find the best stocks to buy or sell before they report.

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