by David Aurelio.
In April 2017 we published our top ten first quarter earnings surprise candidates based on StarMine predictive analytics models. These 17Q1 North American earnings surprise candidates outperformed the S&P 500’s earnings beat and miss rates by 26.6 percentage points (ppts).
The StarMine SmartEstimate® is a weighted average of analyst estimates, with more weight given to more recent estimates and more accurate analysts. Our studies have shown that when the SmartEstimate® differs significantly from the consensus (IBES Mean), the Predicted Surprise accurately predicts the direction of earnings surprises or further revisions 70% of the time. When significant Predicted Surprise for revenue is also present for the period, the accuracy improves to 78%.
Since 2011 Q4 we’ve posted our top 10 North American candidates for earnings beats and misses. The running total from 11Q4 through 17Q1 of S&P 500 companies beat earnings estimates is 61.0% and 19.7% for companies that missed. In total Starmine North American positive surprise candidates over that time have been correct 80.9% of the time and correctly called 63.9% of negative surprise candidates. This is a 64.1 ppts improvement over the S&P 500’s rates.
StarMine North American Positive Earnings Surprise History vs. S&P 500 Beat Rate:
StarMine North American Negative Earnings Surprise History vs. S&P 500 Beat Rate:
Using SmartEstimate® and Predicted Surprise data, we highlighted 10 companies with a high probability of reporting first quarter earnings surprises in the direction we called — five likely to beat the analysts’ consensus estimate and another five likely to fall short.
StarMine 17Q1 North American Positive Earnings Surprise Candidates:
All five of Starmine’s 17Q1 North American positive earnings surprise candidates reported earnings above the mean at the time of the April 19, 2017 report, which can be viewed here. This was 24.4 ppts above the S&P 500’s 17Q1 earnings beat rate of 75.6%.
One of the five of Starmine’s 17Q1 North American negative earnings surprise candidates reported earnings below the mean at the time of the April 30, 2017 report, which can be viewed here. This was 2.2 ppts above the 17.8% of S&P 500 companies that reported 17Q1 earnings below expectations.
Thomson Reuters 17Q2 North American Predicted Surprise candidates can be viewed here:
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