Colony Credit Real Estate (BRSP) is expected to see an annualized decline in earnings driven by higher earnings when it reports its results for the quarter ending June 2021. This well-known consensus forecast provides a good indication of the company’s earnings picture. but how the actual results compare to those estimates is a powerful factor that can affect the short-term value of its stock.
The income statement, which is expected to be released on August 4, 2021, could help the stock move higher if these key figures turn out to be better than expected. On the other hand, if they miss, the stock could move lower.
While management’s discussion of the business environment in the income statement will largely determine the sustainability of immediate price changes and future earnings expectations, it is worth having a limited understanding of the chances of a positive share surprise.
Sachs consensus assessment
The real estate investment fund is expected to post quarterly earnings of $ 0.16 per share in its upcoming report, down 38.5% from the same period last year.
Revenue is expected to be $ 25.95 million, up 4.1% year-on-year.
Assessment of the trend of change
The consensus EPS for the quarter has remained unchanged for the past 30 days. In essence, it is a reflection of how the leading analysts collectively revised their initial estimates for this period.
Investors should be aware that cumulative change may not always reflect the direction in which each analyst is revising estimates.
Price, Consensus and Surprise for EPS
The revision of estimates prior to the publication of the company’s income statement provides a key to understanding the business environment for the period to be published. This insight is at the heart of our patented Zacks Earnings ESP (Expected Surprise Prediction) model.
Zacks Earnings ESP compares the most accurate estimate to the Zacks consensus estimate for the quarter; The most accurate estimate is the latest version of the Zacks Consensus earnings per share estimate. The idea here is that analysts revising their estimates just before the earnings report is released have the most recent information that could potentially be more accurate than what they and other consensus participants predicted earlier.
Thus, a positive or negative ESP of earnings theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the predictive power of the model is only important for positive ESP values.
A positive profit ESP is a strong predictor of profit growth, especially when combined with a Zacks rank of # 1 (strong buy), 2 (buy), or 3 (hold). Our research shows that stocks with this combination cause a positive surprise almost 70% of the time, and a solid Zacks rating actually increases the predictive power of Earnings ESP.
Note that a negative ESP for earnings does not indicate a miss. Our research shows that it is difficult to predict earnings growth with any degree of certainty for stocks with negative ESP earnings and / or a Sachs rating of 4 (sell) or 5 (strong sell).
How were the numbers for the colony loan formed?
For the colony loan, the most accurate estimate is the same as the Sachs consensus estimate, suggesting that there is no recent analyst opinion that differs from those adopted for the consensus estimate. This resulted in a 0% profit for ESP.
On the other hand, the stock currently has a Zacks # 3 rating.
Thus, this combination makes it difficult to conclusively predict that Colony Credit will outperform consensus earnings per share estimates.
Is there a clue to the windfall story?
Analysts often consider the extent to which a company may have met consensus expectations in the past when calculating their estimates of future earnings. So, it’s worth taking a look at the surprise history to gauge its impact on the upcoming date.
Colony Credit was expected to post earnings of $ 0.13 per share in the most recent reporting quarter, while it actually posted earnings of $ 0.14, which was unexpectedly + 7.69%.
The company has quadrupled its net earnings per share consensus over the past four quarters.
Excess or decline in profits cannot be the only reason a stock moves up or down. Many stocks end up losing ground despite declining earnings due to other factors that disappoint investors. Likewise, unanticipated catalysts are helping a number of stocks rally despite lost profits.
However, stock betting that is expected to exceed earnings expectations does increase the odds of success. This is why it is worth checking the ESP earnings and Zacks ranking before releasing the quarterly issue. Be sure to use our earnings ESP filter to identify the best stocks to buy or sell before they report.
Colony Credit does not appear to be a compelling profit candidate. However, investors must look at other factors to bet or stay away from this stock pending release.
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