Will Southern Co. (SO) 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 Southern Co. (SO), which belongs to the Zacks Utility – Electric Power industry.

The energy company has had a good streak of beating earnings estimates, especially looking at the two previous reports. The average surprise over the last two quarters was 11.46%.

For the last reported quarter, Southern Co. showed earnings of $1.03 per share versus the Zacks Consensus Estimate of $0.90 per share, representing a surprise of 14.44%. In the previous quarter, the company was expected to post earnings of $0.59 per share and actually produced earnings of $0.64 per share, representing a surprise of 8.47%.

Price and EPS are surprising

Given its earnings history, recent estimates for Southern Co. have been trending higher. The Zacks Earnings ESP (Expected Surprise Prediction) for the company is positive, which is a great sign that the company is outperforming earnings, especially when paired 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 the 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.

Southern Co. currently has an Earnings ESP of +3.50%, suggesting that analysts have become bullish on its near-term earnings potential. When we combine this positive Earnings ESP with the stock’s Zacks Rank #3 (Hold), it shows that another beat is likely just around the corner. The company’s next earnings report is expected to be released on August 1, 2024.

In the case of the Earnings ESP indicator, it is important to remember that a negative value reduces its predictive power; however, a negative Earnings ESP value does not mean that profits have not been achieved.

Many companies end up beating consensus EPS estimates, but that may not be the only basis for their stock growth. On the other hand, some stocks can maintain their position 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.