Forward Estimates and Positive Revisions Point To Leading Stocks

Forward Estimates and Positive Revisions Point To Leading Stocks

Leading stocks continue to show increasing earnings and sales.

Growth stocks should be well-positioned for sustained future growth.

Investors and swing traders will often look for stocks with future growth potential by monitoring Earnings Per Share and Sales quarter over quarter and year over year.

It's easy to see how the latest earnings report will point you in the direction of great stocks, but it is also important to look ahead at future estimates and revisions.

You can gain an edge over other market participants when you anticipate the direction of the future move.

Looking Ahead

Financial analysts interpret all fundamental metrics while researching companies to invest in. Research analysts may look for a company cutting costs or expanding to new markets while interpreting the company's quarterly guidance to help predict future moves.

Institutional research firms consistently dig into companies' potential for future growth. When investing millions into a stock, they want to make sure that the company is expected to continue growing for an extended period of time.

When more information about a company is discovered, analysts will release their estimates of how they believe the company will grow.

Looking at future estimates gives traders insight into the research that has been conducted by institutional investment firms.

Future Estimates and Revisions

As research firms constantly analyze fundamentals, any new discoveries may change an analyst's estimate. Keep future estimates on your radar and look for any changes leading up to and after a quarterly report.

A growing company may disclose that their future growth is expected to increase while raising guidance. When a company reports earnings, look for a huge earnings beat and raise of their growth expectations.

At year-end, a company may shed some light as to its goals heading into a new year. Be sure to check estimate revisions to see if research analysts are increasing their earnings and sales projections when new information is announced.

Model Book Leading Stocks

When analyzing a stock's future estimates you want to make sure they are expected to increase consistent with past winning stocks.

Model book stocks that lead the market have outstanding Earnings and Sales growth to support their huge moves.

Institutions are the driving force that sustains a stock's advance. As a company continues to grow quarter over quarter and year over year, institutions will continue investing.

Quarterly Estimates

Top performing stocks exhibit:

  • The latest EPS growth of 30% or greater quarter over quarter
  • The latest sales growth of 30% or greater quarter over quarter

Look For Massive Growth

The best performing stocks will see huge quarterly growth – The most recent quarter of a super-performing stock may have triple digit earnings or sales quarter over quarter.

Pay close attention to stocks with estimates that are expected to be over 100% for the next quarter.

Yearly Estimates

Top performing stocks exhibit:

  • Annual EPS growth of 25% or greater year over year
  • Annual sales growth of 25% or greater year over year

Longer Term Growth

Yearly earnings and sales should be positive year over year – Stocks that are growing should continue to show an increase in earnings and sales every year.

Be on the lookout for estimates of a turnaround year in younger stocks when they finally report a positive year after a couple of negative years in a row.

Standout Quarters

As we look for strength on our charts, keep an eye out for exceptional Earnings and Sales.

When looking at future estimates look for signs a stock is expected to grow.

  • Highest Earnings Per Share Ever
  • Highest Sales Ever
  • First Positive EPS Quarter
  • First Positive Percentage Increase Quarter Over Quater

As you begin to understand how Earnings and Sales affect institutional appetite, you will realize the importance of looking ahead.

Examples

Symbol: UBER
Company:
Uber Technologies
Year: 2023

Forward Estimates and Positive Revisions Point To Leading Stocks

In the first quarter of 2023, UBER posted a positive quarter-over-quarter percentage gain, snapping a four-quarter losing streak. More importantly, UBER raised its future estimates and stated they will maintain consistently profitable earnings. UBER delivered and the market responded bringing the stock up 175% in 10 months. As the future outlook weakened so did the stock's price.

Symbol: NTNX
Company:
Nutanix
Year: 2022

Forward Estimates and Positive Revisions Point To Leading Stocks

In the third quarter of 2022, when NTNX beat earnings estimates and raised guidance, the stock went up 90% in four months. This was the start of earnings acceleration that would make NTNX profitable for the first time. Pressure from the general market kept NTNX down, but research firms raised their earnings estimates. Tracking future estimates would have helped you focus on a stock that advanced 140% in nine months after they reported triple digit earnings on two back-to-back quarters,

Symbol: NVDA
Company:
Nvidia
Year: 2023

Forward Estimates and Positive Revisions Point To Leading Stocks

Arguably the strongest stock in 2023-2024, NVDA started to find traction off the 2023 bear market bottom when estimates began to show positive quarter-over-quarter earnings. Future estimates continued to show triple-digit gains while sales began to accelerate for the next three quarters.

Fundamentals In Deepvue

To see estimates in Deepvue, click the Stats Table icon to see Earnings and Sales under your charts.

Forward Estimates and Positive Revisions Point To Leading Stocks

The button will highlight blue indicating the Stats Table is open. To collapse the table click the button again.

At the bottom of your screen, you will see past and future estimates of earnings and sales.

Forward Estimates and Positive Revisions Point To Leading Stocks

We make it easy to spot accelerating or decelerating quarters as well. If there are multiple increasing (or decreasing) quarters in a row of earnings or sales, you will notice a solid blue (or pink) bar under those quarters.

Forward Estimates

Note a vertical dotted line separating past earning reports to the left and future estimates to the right.

When analyzing future growth, compare the projected earnings and sales with the previously reported quarters.

Keep in mind all research from studying other leading stocks. Keep stocks on your watchlist when you see estimated triple-digit percentage increases.

Revisions

On all future quarters and years, you will also notice a blue (up) or pink (down) arrow. These arrows indicate analyst revisions.

When a company reports earnings and announces future outlooks, analysts will change their predictions of how they think the future quarter or year will grow.

Use these revisions to anticipate future moves. If a company reports a huge surprise look for revisions to be up. If a company's earnings and sales are slowing, be weary of revisions going down.

Four Years Out

In the Stats Table, you can toggle between Quarterly and Annual Earnings and Sales

Forward Estimates and Positive Revisions Point To Leading Stocks

You can see up to four years of future estimates and revisions.

Forward Estimates and Positive Revisions Point To Leading Stocks

When screening for stocks make sure to look for companies that are increasing earnings and sales quarter over quarter and year over year.

EPS and Sales Line

You can also see the Earnings and Sales on your charts.

Forward Estimates and Positive Revisions Point To Leading Stocks

Add the DV – Sales Line (Orange) and DV – Earnings Line (Green) to see how the fundamentals affected the price movement on your weekly charts. You can also see visually the future estimates on each line.

Forward Estimates and Positive Revisions Point To Leading Stocks

Putting It Together

Use fundamental estimates in your trading plan to help build conviction on future moves.

Before an earnings report familiarize yourself with the estimates. If there is an earnings miss, watch out for selling pressure to increase and get defensive.

Be on the lookout for earnings surprises. If estimates were low and a company reported huge earnings and sales, analysts expected slower growth and there may be more traders caught off guard. This may bring an influx of buyers trying to buy the stock.

Remember: The top-performing stocks have an increase in earnings and sales quarter over quarter and year over year.

To find the leading stocks, look for the largest future growth.

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