Earnings growth is essential for organizations of all sizes because sustained profitability is key to survival. To calculate earnings, examine a company’s revenues over a certain period and subtract the production costs. A company’s earnings have a significant influence on its share price, with earnings expectations playing a key role in determining market performance.
Against this backdrop, NVIDIA Corporation NVDA, Neurocrine Biosciences, Inc. NBIX and Ball Corporation BALL are delivering strong and impressive earnings growth, making them compelling investment opportunities for the second half of this year.
Earnings Estimates & Share Price Movements
We have frequently seen stock prices decline despite earnings growth or rally after an earnings decline. This is largely the result of a company’s earnings failing to meet market expectations.
Earnings estimates reflect analysts’ views on factors such as sales growth, product demand, the competitive industry environment, profit margins, and cost control. Consequently, earnings estimates are a valuable tool for making investment decisions. They also help analysts evaluate cash flow to determine a firm's fair value.
Thus, investors should be on the lookout for stocks ready to make a big move. Such stocks should have a history of earnings growth and rising quarterly and annual earnings estimates.
Research Wizard: Your Shortcut to Finding Winning Stocks
To shortlist stocks that have striking earnings growth and positive estimate revisions, we have added the following parameters:
Zacks Rank less than or equal to 2 (Only Zacks' 'Buys' and 'Strong Buys' are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off.)
5-Year Historical EPS Growth (%) greater than X-Industry (stocks with a strong EPS growth history).
% Change EPS F(0)/F(-1) greater than or equal to 5 (companies that saw year-over-year earnings growth of 5% or more in the last reported fiscal).
% Change Q1 Estimates over the last 4 weeks greater than zero (stocks that have seen their current quarter earnings estimates revised higher in the last 4 weeks).
% Change F1 Estimates over the last 1 week greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 1 week).
% Change F1 Estimates over the last 4 weeks greater than zero (stocks that have seen their annual earnings estimates revised higher in the last 4 weeks).
The above criteria narrowed the universe of around 7,839 stocks to only 24. Here are the top three stocks:
NVIDIA
NVIDIA is a leading AI infrastructure company with operations across the United States, Taiwan, China, Hong Kong, Europe and other global markets. The company’s expected earnings growth rate for the current year is 90.8%. NVDA currently has a Zacks Rank #2 (Buy) (read more: Missed NVIDIA's 900% Run? Micron Could Be AI's Next Big Winner).
Neurocrine Biosciences
Neurocrine Biosciences is a biopharmaceutical company focused on developing treatments for neurological, neuroendocrine and psychiatric disorders. The company’s expected earnings growth rate for the current year is 48.4%. NBIX currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ball
Ball supplies aluminum packaging solutions for the beverage, personal care and household products industries worldwide. The company’s expected earnings growth rate for the current year is 11.8%. BALL currently has a Zacks Rank #2.
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NVIDIA Corporation (NVDA): Free Stock Analysis Report
Neurocrine Biosciences, Inc. (NBIX): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).