Why MSCI (MSCI) is Poised to Beat Earnings Estimates Again
Are you looking for a stock that has consistently outperformed earnings estimates and may be well positioned to keep the streak alive in the next quarterly report? MSCI (MSCI), part of Zack's Business Software Services industry, could be a good candidate.
This maker of software tools that help portfolio managers make investment decisions has a proven record of outperforming earnings estimates, especially when looking at the two previous reports. The company has had an average surprise of 8.61% over the past two quarters.
For the last quarter of the report, MSCI posted earnings of $ 1.77 per share versus the Zacks Consensus estimate of $ 1.70 per share, a surprise of 4.12%. For the previous quarter, earnings were expected to be $ 1.68 per share, and earnings were actually $ 1.90 per share, a surprise of 13.10%.
Price and EPS surprise
For MSCI, the estimates tend to be higher, thanks in part to this earnings surprise history. If you look at the stock's positive Zacks Earnings ESP (Expected Surprise Prediction), it's a good indicator of a future profit hit, especially when combined with the solid Zacks Rank.
Our research shows that stocks with the combination of a positive ESP result and a Zacks rank of 3 (Hold) or better cause a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate can be up to seven.
The Zacks Earnings ESP compares the most accurate estimate to the Zacks Consensus estimate for the quarter. The most accurate guess is a version of the Zacks consensus, the definition of which is in terms of changes. The idea is that analysts who revise their estimates just before earnings are released will have the latest information that could potentially be more accurate than they and others who contributed to the consensus previously predicted.
MSCI currently has an ESP gain of + 0.11%, suggesting that analysts have been optimistic about the company's earnings outlook lately. That positive ESP result combined with the stock's Zacks Rank 3 (Hold) indicates that another blow may be around the corner. We expect the company's next earnings report to be released on October 27, 2020.
However, investors should note that a negative ESP score for earnings is not an indication of a loss of profit, but a negative score will reduce the predictive power of this metric.
Many companies end up outperforming the consensus-based EPS estimate, but this may not be the only basis for their stocks to rise. On the flip side, some stocks can hold their own even if they miss the consensus estimate.
For this reason, it is very important to review a company's ESP result before its quarterly release to increase the chances of success. Make sure to use our ESP Profit Filter to find the best stocks to buy or sell before they are reported.
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