Wall Street expects to see a year-over-year increase in earnings from higher earnings when Invesco Mortgage Capital (IVR) releases its results for the quarter ending June 2021. While this well-known consensus forecast is important in assessing a company’s earnings picture, it is a powerful factor. This could affect the short-term value of its shares by comparing actual results with these estimates.
The income statement, which is expected to be released on August 4, 2021, could help the stock move higher if these key numbers are better than expected. On the other hand, if they miss, the stock could move lower.
While the sustainability of immediate price changes and future earnings expectations will largely depend on management’s discussion of business conditions in the income statement, it is worth reducing the likelihood of a positive per share surprise.
Sachs consensus assessment
This real estate investment fund is expected to post quarterly earnings of $ 0.09 per share in its upcoming report, which represents a + 105% change from the same period last year.
Revenue is expected to be $ 40.89 million, up 114.9% year-on-year.
Assessment of the trend of change
The EPS consensus forecast for the quarter was revised 33.33% below the current level in the last 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 the direction in which each analyst revises estimates may not always be reflected in the cumulative change.
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. Our patented Zacks Earnings ESP (Expected Surprise Prediction) model is based on this understanding.
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 latest 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 negative ESP earnings do 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 have the numbers changed for Invesco Mortgage Capital?
For Invesco Mortgage Capital, the most accurate estimate coincides with the Zacks consensus estimate, indicating that there is no recent analyst opinion that differs from what was assumed in the consensus estimate. This resulted in a 0% return on the ESP.
On the other hand, the stock currently has a Zacks # 4 rating.
Therefore, this combination makes it difficult to conclusively predict that Invesco Mortgage Capital will outperform consensus earnings per share estimates.
Is there a clue to the story of profit and loss surprises?
Analysts often consider the extent to which a company may have met past consensus estimates 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.
Invesco Mortgage Capital was expected to earn $ 0.08 per share in the most recent reporting quarter, while actual earnings were $ 0.11, unexpectedly + 37.50%.
The company has tripled the earnings per share consensus forecast 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, unforeseen 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 your 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.
Invesco Mortgage Capital 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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