Will Power Integrations (POWI) 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? Power Integrations (POWI), a Zacks Semiconductors – Power Industry stock, is worth considering.

This maker of power conversion chips has a strong history of achieving top earnings estimates, especially considering its two previous reports. The company boasts an average surprise for the last two quarters of 5.27%.

For the last reported quarter, Power Integrations posted earnings of $0.82 per share versus the Zacks Consensus Estimate of $0.78 per share, representing a surprise of 5.13%. For the previous quarter, it was expected that the company would post earnings of $0.74 per share and it actually produced earnings of $0.78 per share, delivering a surprise of 5.41%.

Price and EPS surprise

Given this earnings history, recent estimates for Power Integrations are higher. In fact, the company’s Zacks Earnings ESP (expected surprise estimate) 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.

Power Integrations currently has an Earnings ESP of +4.55%, which suggests analysts have recently become optimistic about the company’s earnings prospects. This positive Earnings ESP combined with the stock’s Zacks Rank #3 (Hold) indicates 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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Power Integrations, Inc. (POWI): Free Inventory Analysis Report

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