Will Fabrinet (FN) Beat Estimates Again in Its Next Earnings Report? – July 22, 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 Fabrinet (FN – Free report.) This company, which operates in the Zacks Electronics – Miscellaneous Components industry, shows the potential for another earnings beat.

The company, which assembles optical, electromechanical, and electronic devices for other companies, has had a good run of beating earnings estimates, especially when looking at the two previous reports. The average surprise over the past two quarters was 7.35%.

For the last reported quarter, Fabrinet showed earnings of $2.39 per share versus the Zacks consensus estimate of $2.12 per share, representing a surprise of 12.74%. In the previous quarter, the company was expected to post earnings of $2.04 per share and actually produced earnings of $2.08 per share, representing a surprise of 1.96%.

Price and EPS are surprising

With this history, there has been a recent favorable revision in earnings estimates for Fabrinet. In fact, the stock’s Zacks Earnings ESP (Expected Surprise Prediction) is positive, which is a great indicator of an earnings beat, 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.

Fabrinet currently has an Earnings ESP of +0.78%, 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.

Investors should remember, however, that a negative Earnings ESP reading does not indicate a failure to achieve expected profits, but a negative value reduces the predictive power of this indicator.

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.