Will RBC Bearings (RBC) Continue Its Earnings Surprise?

If you are on the lookout for a stock that could potentially keep its positive earnings trend going, consider RBC Bearings (RBC). This company is part of the Zacks Manufacturing - General Industrial sector and has been performing well.

Recent Performance

In its previous earnings reports, RBC Bearings has shown a strong ability to exceed expectations. Over the last two quarters, the company has, on average, surpassed earnings estimates by approximately 6.82%.

In the most recent quarter, RBC Bearings reported earnings of $2.54 per share, beating the Zacks Consensus Estimate of $2.37 per share by a solid 7.17%. In the quarter before that, the company's earnings of $2.47 per share also exceeded expectations, as the forecast was $2.32 per share, reflecting a surprise of 6.47%.

Increasing Estimates

The positive earnings history of RBC Bearings has led to a rise in estimates from analysts. This upward trend is a strong sign that the market anticipates favorable results for the company. The stock is currently showing a positive Zacks Earnings ESP (Expected Surprise Prediction), which is a key indicator of a potential earnings beat.

Research indicates that stocks with a positive Earnings ESP, paired with a Zacks Rank of #3 (Hold) or higher, have about a 70% chance of delivering a positive surprise. Essentially, if you evaluate 10 stocks with this combination, it's likely that around seven of them will outperform their consensus estimates.

Understanding Earnings ESP

The Zacks Earnings ESP measures the difference between the Most Accurate Estimate and the Zacks Consensus Estimate for a given quarter. The Most Accurate Estimate is based on recent revisions by analysts, which often reflect the most current insights. This method allows for a prediction that could be more reliable than earlier estimates.

Currently, RBC Bearings holds an Earnings ESP of +9.57%, indicating that analysts are increasingly optimistic about its short-term earnings potential. When you combine this with the stock's Zacks Rank of #3, it suggests that another earnings surprise could be on the horizon.

Considerations for Investors

It's important to remember that a negative Earnings ESP can diminish the predictive strength of this metric, but it does not mean that a company will definitely miss its earnings estimates. Many firms exceed the consensus EPS estimate, but they may still see their stock prices fluctuate for other reasons. Conversely, some stocks may remain stable even if they miss expectations.

Given these factors, it's crucial for investors to examine a company's Earnings ESP before its earnings announcement to improve the chances of making successful investment decisions. Utilizing an Earnings ESP Filter can help identify the best stocks to consider before earnings reports.

Earnings, Stocks, Estimates