Can Cigna (CI) maintain its earnings surprise streak?

Have you been looking for stocks that could be well positioned to maintain their strong performance streak in the upcoming report? Cigna (CI), which belongs to the Zacks Insurance – Multi line industry, is worth considering.

Looking at the last two reports, this health insurer has had a strong streak of beating earnings estimates. Over the last two quarters, the company has exceeded estimates by an average of 10.34%.

For the most recently reported quarter, Cigna posted earnings of $5.81 per share versus the Zacks Consensus Estimate of $5.05 per share, representing a surprise of 15.05%. For the previous quarter, it was expected that the company would post earnings of $4.44 per share and it actually produced earnings of $4.69 per share, delivering a surprise of 5.63%.

Price and EPS surprise

With this earnings history in mind, Cigna’s latest estimates are getting higher. In fact, the company’s Zacks Earnings ESP (expected surprise) is positive, which is a great sign of earnings growth, especially when you combine this metric with a nice 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, which could potentially be more accurate than what they and other consensus participants had previously predicted.

Cigna currently has an earnings ESP of +1.86%, which suggests analysts have become bullish on its near-term earnings potential. When we combine the positive Earnings ESP with the stock’s Zacks Rank #2 (Buy), it shows that another rally is likely just around the corner. The company’s next earnings report is expected to be released on November 5, 2020.

When earnings ESP turns negative, investors should remember that this will reduce the predictive power of this metric. However, a negative value does not indicate a company’s lack of profits.

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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Cigna Corporation (CI): Free Stock Analysis Report

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