Will Emerson Electric (EMR) beat estimates again in its next earnings report?

Have you been looking for a stock that could be well-positioned to continue its earnings streak in its upcoming report? Consider Emerson Electric (EMR), which belongs to the Zacks Manufacturing – Electronics industry.

The manufacturer of process control systems, valves and analytical instruments has a well-established reputation for beating earnings estimates, especially looking at the two previous reports. The company boasts an average earnings surprise of 12.62% over the past two quarters.

For the last reported quarter, Emerson Electric showed earnings of $1.36 per share versus the Zacks consensus estimate of $1.26 per share, delivering a surprise of 7.94%. In the previous quarter, the company was expected to post earnings of $1.04 per share and actually delivered earnings of $1.22 per share, delivering a surprise of 17.31%.

Given this earnings history, Emerson Electric’s latest estimates are moving higher. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the company is positive, which is a great sign of an earnings beat, especially when you combine this metric with its strong Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better deliver a positive surprise almost 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat consensus estimates could be as many 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 revision of the Zacks Consensus definition that is related to revision. 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 other contributors to the consensus had previously predicted.

Emerson Electric currently has an Earnings ESP of +2.23%, suggesting that analysts have recently become bullish on the company’s earnings prospects. This positive Earnings ESP, combined with the stock’s Zacks Rank #2 (Buy), indicates that another beat is likely just around the corner.

When the Earnings ESP is negative, investors should remember that this will reduce the predictive power of the indicator. However, a negative value is not an indicator of a lack of earnings for the stock.

Many companies end up beating consensus EPS estimates, although that’s not the only reason their stocks appreciate. In addition, some stocks can remain stable even if they end up missing consensus estimates.

For this reason, it is very important to check a company’s Earnings ESP before its quarterly release to increase your chances of success. Make sure you use our Earnings ESP Filter to discover the best stocks to buy or sell before they are released.

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