Are you on the hunt for a stock that might be primed to maintain its earnings-beat streak in its upcoming report? Look no further than Texas Instruments (TXN), a prominent player in the Zacks Semiconductor – General industry. This chipmaker has been on a roll, consistently exceeding earnings estimates in its last two reports.
Over the past two quarters, Texas Instruments has outperformed expectations by an average of 9.19%. In the most recent quarter, the company delivered earnings of $1.22 per share, surpassing the Zacks Consensus Estimate of $1.16 per share, a positive surprise of 5.17%. Similarly, in the previous quarter, it reported earnings of $1.20 per share, exceeding the projected $1.06 per share by a significant 13.21%.
This consistent track record of exceeding expectations has led to upward revisions in recent estimates for Texas Instruments. The company currently boasts a positive Zacks Earnings ESP (Expected Surprise Prediction), a strong indicator of an impending earnings beat. When combined with its solid Zacks Rank #3 (Hold), this positive ESP suggests a high probability of another positive surprise.
Our research shows that stocks with a positive Earnings ESP and a Zacks Rank #3 (Hold) or better have a remarkable success rate of nearly 70% in beating consensus estimates. In other words, out of ten stocks meeting this criteria, you could expect as many as seven to outperform expectations.
The Zacks Earnings ESP measures the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. The Most Accurate Estimate is a refined version of the consensus based on the latest information from analysts who have recently revised their estimates. The rationale here is that these analysts, with their up-to-the-minute insights, potentially offer a more accurate prediction than earlier consensus estimates.
Currently, Texas Instruments has an Earnings ESP of +0.44%, suggesting that analysts are increasingly optimistic about its near-term earnings potential. This positive ESP, coupled with the stock’s Zacks Rank #3 (Hold), strengthens the possibility of another earnings beat.
Texas Instruments’ next earnings report is scheduled for release on October 22, 2024.
It’s important to note that a negative Earnings ESP doesn’t necessarily imply an earnings miss, but it does reduce the predictive power of this metric. While exceeding the consensus EPS estimate is a positive sign, it’s not the sole factor driving stock gains. Some stocks may remain stable even if they miss the consensus estimate.
Therefore, checking a company’s Earnings ESP before its quarterly release can significantly enhance your odds of success. This valuable insight can help you make more informed investment decisions.
