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Pool Corp. (POOL) Keep the Surprise Sequence of Profits Alive?


LLooking for a stock that has consistently exceeded earnings estimates and could be well positioned to keep the streak alive in its next quarterly report? Pool Corp. (POOL), which belongs to the Zacks leisure and leisure products industry, could be an excellent candidate to consider.

This pool supply distributor has had a nice run of overshooting earnings estimates, especially when looking at the previous two reports. The average surprise for the last two quarters was 16.64%.

For the last reported quarter, Pool Corp. came out with a profit of $2.30 per share against the Zacks consensus estimate of $1.97 per share, which is a surprise of 16.75%. For the prior quarter, the company was expected to post earnings of $3.87 per share and it actually produced earnings of $4.51 per share, delivering a surprise 16.54%.

Price and Surprise EPS

With this earnings history in mind, recent estimates have risen for Pool Corp. metric with its nice Zacks Rank.

Our research shows that stocks with the combination of a positive earnings ESP and a Zacks rank of #3 (Hold) or better produce a positive surprise almost 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that exceeded the consensus estimate could be as high as seven.

The Zacks Earnings ESP compares the most accurate estimate to the Zacks consensus estimate for the quarter; the most accurate estimate is a version of the Zacks Consensus whose definition is tied to change. The idea here is that analysts revising their estimates just before the earnings release have the latest information, which could potentially be more accurate than they and other consensus contributors predicted earlier.

Pool Corp. has an earnings ESP of +2.53% at the moment, suggesting analysts have become optimistic about its near-term earnings potential. When you combine this positive earnings ESP with the Zacks rank #2 (buy) of the stock, it shows that another beat may be around the corner. The company’s next earnings report is expected to be released on April 21, 2022.

Investors should note, however, that a negative earnings ESP reading is not indicative of a shortfall, but a negative value reduces the predictive power of this measure.

Many companies end up beating the consensus EPS estimate, but that may not be the only basis for their stock rally. On the other hand, some stocks may hold firm even if they end up missing the consensus estimate.

For this reason, it is really important to check a company’s earnings ESP before its quarterly release to increase the chances of success. Be sure to use our earnings ESP filter to discover the best stocks to buy or sell before they are released.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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