Will BJ (BJ) beat estimates again in its next earnings report?

Have you been looking for stocks that could be well positioned to maintain their strong performance streak in the upcoming report? It is worth considering BJ’s Wholesale Club (BJ), which belongs to the Zacks Consumer Services – Miscellaneous industry.

Looking at the last two reports, this membership wholesale operator has had a strong streak of beating earnings estimates. The company has exceeded estimates by an average of 15.82% over the last two quarters.

For the most recent quarter, BJ’s was expected to post earnings of $0.89 per share, but instead reported earnings of $1 per share, representing a surprise of 12.36%. The consensus estimate for the prior quarter was $0.83 per share when it actually delivered $0.99 per share, representing a surprise of 19.28%.

Price and EPS surprise

Thanks in part to this history, there has been a recent favorable change in BJ’s earnings estimates. In fact, the stock’s ESP (expected surprise) is positive, which is an excellent indicator of earnings growth, 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 #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, which could potentially be more accurate than what they and other consensus participants had previously predicted.

Currently, BJ’s has an earnings ESP of +6.76%, which suggests analysts are becoming optimistic about its near-term earnings potential. When we combine the positive Earnings ESP with the stock’s Zacks Rank #2 (Buy), it shows that another rally is likely just around the corner.

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, but that may not be the only basis for their stock’s rise. On the other hand, some stocks may hold even if they fall short of the consensus price.

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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