Will AppLovin (APP) 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 AppLovin (APP), which belongs to the Zacks Technology Services industry.

The mobile app technology 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 28.77%.

For the last reported quarter, AppLovin showed earnings of $0.67 per share versus the Zacks consensus estimate of $0.57 per share, representing a surprise of 17.54%. In the previous quarter, the company was expected to post earnings of $0.35 per share and actually produced earnings of $0.49 per share, representing a surprise of 40%.

In the case of AppLovin, 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.

AppLovin currently has an Earnings ESP of +4.76%, suggesting that analysts have recently become bullish on the company’s earnings prospects. This positive Earnings ESP, combined with the stock’s Zacks Rank #1 (Strong Buy), indicates that another beat is likely just around the corner. We expect the company’s next earnings report to be released on August 7, 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, 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.

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