Will Ulta (ULTA) beat estimates again in its next earnings report?

Have you been looking for stocks that could be well positioned to maintain their strong performance streak in the upcoming report? Ulta Beauty (ULTA), which belongs to the Zacks Retail – Miscellaneous industry, is worth considering.

This beauty retailer has an established history of achieving top earnings estimates, especially considering its two previous reports. The company boasts an average surprise for the last two quarters of 23.98%.

For the most recent quarter, Ulta was expected to report earnings per share of $5.69, but instead it reported earnings of $6.68 per share, representing a surprise of 17.40%. The consensus estimate for the prior quarter was $4.09 per share when it actually delivered $5.34 per share, representing a surprise of 30.56%.

Price and EPS surprise

For Ulta, estimates are trending upwards, thanks in part to its history of surprising results. And if 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.

Ulta currently has an earnings ESP of +0.66%, which suggests analysts have recently become optimistic about the company’s earnings prospects. This positive Earnings ESP combined with the stock’s Zacks Rank #2 (Buy) indicates that another rally is likely just around the corner. We expect the company’s next earnings report to be published on May 25, 2023.

However, investors should remember that a negative earnings ESP reading does not mean a loss of earnings, but a negative value reduces the predictive power of the metric.

Many companies end up beating consensus EPS estimates, though that’s not the only reason their shares rise. Additionally, some stocks may remain stable even if they fall short of consensus estimates.

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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