Will Eaton (ETN) Beat Estimates Again in Its Next Earnings Report? – July 15, 2024

If you are looking for a stock that has a solid history of beating earnings estimates and is well-positioned to continue the trend into its next quarterly report, you should consider Eaton (ETN – Free report.) This company, which operates in the Zacks Manufacturing – Electronics industry, shows the potential for another earnings beat.

Looking at the last two reports, this energy management company has had a strong streak of beating earnings estimates. The company has beaten estimates by an average of 4.25% over the last two quarters.

For the last reported quarter, Eaton showed earnings of $2.40 per share, compared to the Zacks consensus estimate of $2.28 per share, representing a surprise of 5.26%. In the previous quarter, the company was expected to post earnings of $2.47 per share and actually came out at $2.55 per share, representing a surprise of 3.24%.

Price and EPS are surprising

In Eaton’s case, estimates are higher, thanks in part to this earnings surprise history. And when you look at the stock’s positive Zacks Earnings ESP (Expected Surprise Prediction), it’s a great indicator of future earnings beats, especially when paired 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 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.

Eaton currently has an Earnings ESP of +0.42%, suggesting that analysts have recently become bullish on the company’s earnings prospects. This positive Earnings ESP, combined with the stock’s Zacks Rank #3 (Hold), indicates that another beat is likely just around the corner.

In the case of the Earnings ESP indicator, it is important to remember that a negative value reduces its predictive power; however, it is important to remember that a negative Earnings ESP does not indicate a divergence in earnings.

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.