Will elf Beauty (ELF) beat estimates again in its next earnings report?

Are you looking for a stock that has consistently beaten earnings estimates and could be well-positioned to continue that streak in the next quarterly report? Elf Beauty (ELF), which belongs to the Zacks Cosmetics industry, could be a great stock to consider.

This cosmetics company has seen a nice streak of beating earnings estimates, especially looking at the previous two reports. The average surprise for the last two quarters was 97.28%.

For the most recent reported quarter, elf Beauty posted earnings of $0.36 per share versus the Zacks Consensus Estimate of $0.16 per share, representing a surprise of 125%. For the previous quarter, it was expected that the company would post earnings of $0.23 per share and it actually produced earnings of $0.39 per share, delivering a surprise of 69.57%.

Price and EPS surprise

For elf Beauty, estimates are trending upwards, thanks in part to its surprising earnings history. And when 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 Estimates to the Zacks Consensus Estimates for the quarter; The Most Accurate Estimate is the Zacks Consensus version, which is defined in terms of change. The idea is that analysts reviewing their estimates just before an earnings release have the latest information that could potentially be more accurate than what they and other consensus participants had previously predicted.

Elf Beauty currently has an Earnings ESP of +31.48%, which suggests analysts have recently become optimistic about the company’s earnings prospects. This positive Earnings ESP combined with the stock’s Zacks Rank #1 (Strong Buy) indicates that another rally is likely just around the corner.

For the Earnings ESP metric, remember that a negative value reduces its predictive power; however, a negative earnings ESP does not mean a loss of earnings.

Many companies end up beating consensus EPS estimates, but that may not be the only basis for their stock’s rise. On the other hand, some stocks may hold their ground even if they fall short of the consensus price.

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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