Get to know the trends ahead of next week’s premiere

Vail Resorts (MTN) is expected to report year-over-year earnings growth on higher revenue when it reports results for the quarter ended July 2021. This widely-known consensus forecast gives a good idea of ​​the company’s earnings picture, but how the actual results stack up against those estimates is a strong factor that could impact the stock’s price in the near term.

The earnings report, due on September 23, 2021, could help the stock rise if those key numbers come out better than expected. On the other hand, if they fall short of expectations, the stock could fall.

While the sustainability of the immediate price movement and future earnings expectations will largely depend on management’s discussion of business conditions during the earnings call, it is worth limiting the likelihood of a positive EPS surprise.

Zacks Consensus Estimate

In its upcoming report, the ski resort operator is expected to report a quarterly loss of $3.57 per share, representing a year-over-year change of +6.5%.

Revenue is expected to be $188.81 million, representing an increase of 144.5% compared to the same quarter last year.

Estimate the trend of change

The consensus EPS estimate for the quarter remained unchanged over the past 30 days. This is essentially a reflection of how the analysts covering the aggregate have reassessed their initial estimates during that period.

Investors should note that the aggregate change does not necessarily reflect the direction of estimate revisions by each major analyst.

Price, Consensus and EPS Surprise

Whisper about earnings

Estimate revisions ahead of a company’s earnings release provide a clue as to business conditions in the period in which the earnings are due to be released. Our proprietary surprise prediction model, the Zacks Earnings ESP (Expected Surprise Prediction), is based on this knowledge.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a newer version of the Zacks Consensus EPS. 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.

Thus, a positive or negative Earnings ESP reading theoretically indicates a likely deviation of actual earnings from the consensus estimate. However, the model’s predictive power is only significant for positive ESP readings.

A positive Earnings ESP is a strong predictor of an earnings beat, especially when paired with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks in this combination deliver a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of its Earnings ESP.

Please note that a negative Earnings ESP reading does not indicate a missed profit. Our research shows that it is difficult to predict earnings beats with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Ranks of 4 (Sell) or 5 (Strong Sell).

How do the numbers stack up for Vail resorts?

For Vail Resorts, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company’s earnings prospects. This resulted in an earnings ESP of -9.03%.

On the other hand, the stock currently carries a Zacks Rank #4.

As a result, it is difficult to clearly predict that Vail Resorts will beat consensus earnings per share estimates.

Are the financial results surprising? Does history matter?

When calculating a company’s future earnings estimates, analysts often consider how well it matched previous consensus estimates. So it’s worth looking at a surprising story to assess its impact on the upcoming numbers.

For the last reported quarter, it was expected that Vail Resorts would post earnings of $6.67 per share when it actually came to $6.72, delivering a surprise of +0.75%.

The company has beaten consensus EPS estimates twice over the last four quarters.

Summary

Improving or lacking earnings may not be the only basis for a stock’s value rising or falling. Many stocks lose value despite good earnings because of other factors that disappoint investors. Similarly, unforeseen catalysts help many stocks gain despite losing profits.

That said, betting on stocks that are expected to beat earnings expectations increases your chances of success. That’s why it’s worth checking a company’s earnings ranking and Zacks Rank ahead of their quarterly release. Use our Earnings ESP filter to find the best stocks to buy or sell before they’re reported.

Vail Resorts doesn’t seem like a compelling candidate for earnings beats. However, investors should also pay attention to other factors if they want to bet on or stay away from these stocks ahead of an earnings release.

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