SPX Technologies Earnings Expectations: Should You Invest?

SPX Technologies (SPXC) is anticipated to report a growth in earnings compared to the previous year, alongside an increase in revenue when its quarterly results are released for the period concluding in September 2024. As the earnings release date approaches, traders and investors are watching closely to see how the actual results stack up against the widely held expectations. The earnings report is due on October 30, 2024, and its outcomes could influence the stock price significantly. If the reported figures exceed projections, the stock might experience upward momentum. Conversely, missing these estimates could lead to a downward move in stock value.

The sustainability of this price change, and future earnings expectations, will largely depend on how management discusses business conditions during the earnings call. Therefore, it’s worthwhile to evaluate the likelihood of a positive earnings per share (EPS) surprise ahead of this announcement.

Zacks Consensus Estimate

For the upcoming earnings report, SPX Technologies is expected to declare quarterly earnings of $1.38 per share. This figure represents a notable year-over-year increase of 30.2%. Additionally, revenue for this quarter is projected to reach approximately $500.23 million, marking an 11.5% rise from the year-ago figure.

Estimate Revision Trends

Over the past month, the consensus EPS estimate has remained stable, indicating that analysts covering SPX Technologies have not altered their initial expectations. It’s crucial to note that a collective estimate change doesn't always reflect a uniform revision pattern among analysts.

Earnings Whisper

Tracking estimate revisions leading up to the earnings release can provide insights into the prevailing business conditions. This assessment is central to the Zacks Earnings ESP (Expected Surprise Prediction) model. The ESP compares the Most Accurate Estimate—which is a recent version of the Zacks Consensus estimate—to the consensus EPS estimate. Analysts adjusting their predictions before an earnings release are often considered to have access to the most current information, potentially yielding a more reliable outlook than earlier estimates. A positive Earnings ESP suggests a strong likelihood of an earnings beat, especially when combined with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold). Research indicates that stocks fitting this profile outperform consensus predictions approximately 70% of the time.

However, it is essential to highlight that a negative Earnings ESP does not inherently indicate a guaranteed earnings miss. Historical data shows that predicting a missed estimate becomes much more difficult for stocks that show negative ESP readings and/or hold a Zacks Rank of #4 (Sell) or #5 (Strong Sell).

Position of SPX Technologies

For SPX Technologies, the Most Accurate Estimate aligns with the Zacks Consensus Estimate, which suggests that no recent analyst evaluations contradict the consensus. This equivalency results in an Earnings ESP of 0%, presenting challenges in forecasting whether SPX Technologies will surpass the anticipated EPS estimate confidently. Nevertheless, the company carries a Zacks Rank of #2, which reflects a favorable intermediate outlook.

Reviewing Earnings Surprise History

When analysts decide on future earnings estimates, they often examine a company’s track record in meeting or exceeding these expectations. SPX Technologies presents a mixed history; for the last reported quarter, analysts projected earnings of $1.26 per share, while the company exceeded this estimate with reported earnings of $1.42, resulting in a positive surprise of 12.70%. Moreover, SPX Technologies has successfully beaten consensus EPS estimates three times over the past four quarters.

Conclusion

It is important to understand that while earnings surprises can influence stock movements, they are not the sole determinants of market performance. Some stocks may still decline after an earnings beat due to various factors that may disappoint investors, while unexpected catalysts may elevate a stock even in the event of an earnings miss. Investing in stocks that are forecasted to beat earnings expectations enhances the chances of favorable outcomes. Therefore, reviewing a company’s Earnings ESP and Zacks Rank before earnings announcements can be beneficial. Although SPX Technologies may not appear to be a strong candidate for an earnings beat, investors would do well to consider additional variables when determining whether to invest in this stock as the earnings report date approaches.

Stay informed about upcoming earnings reports using the Zacks Earnings Calendar.

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