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

Are you looking for a stock that has consistently beat earnings estimates and could be well-positioned to continue its streak in the next quarterly report? GSK (GSK), which belongs to the Zacks Medical – Biomedical and Genetics industry, could be a great stock to consider.

This drugmaker has had a nice streak of beating earnings estimates, especially considering its two previous reports. The average surprise for the last two quarters was 10%.

For the last reported quarter, Glaxo posted earnings of $0.97 per share versus the Zacks Consensus Estimate of $0.85 per share, representing a surprise of 14.12%. For the previous quarter, it was expected to post earnings of $0.85 per share and it actually produced earnings of $0.90 per share, delivering a surprise of 5.88%.

For Glaxo, estimates are trending upwards, thanks in part to its history of surprising results. And if you look at the positive Zacks Earnings ESP (Expected Surprise Estimate), it is a great indicator of future earnings growth, especially when combined with the 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 Estimate to the Zacks Consensus Estimate for the quarter; The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea is that analysts revising their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had previously predicted.

Glaxo currently has an Earnings ESP of +0.73%, suggesting that 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 uptick is likely just around the corner.

However, investors should remember that a negative earnings ESP reading does not mean a loss of earnings, but a negative value reduces the predictive power of the metric.

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 ultimately fail to meet 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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