by Tajinder Dhillon.
In July 2021 we published our 21Q2 earnings surprise candidates based on StarMine predictive analytics. Using the FTSE Russell 1000 Index as our universe, our 21Q2 earnings surprise predictions scored 80% correct.
The StarMine SmartEstimate® is a weighted average of analyst estimates, with more weight given to more recent estimates and more accurate analysts. Our research has shown that when the SmartEstimate® differs significantly from the consensus (I/B/E/S 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 2011 Q4 through 2021 Q2 of S&P 500 companies beat earnings estimates is 67.5% and 17.7% for companies that missed. Over this same period, StarMine North American positive surprise candidates have been correct 83.0% of the time and correctly called 67.7% of negative surprise candidates.
StarMine North American Positive Earnings Surprise History vs. S&P 500 Beat Rate:
StarMine North American Negative Earnings Surprise History vs. S&P 500 Miss Rate:
Using SmartEstimate® and Predicted Surprise data, we highlighted 10 companies with a high probability of reporting 21Q2 earnings surprises in the direction we called — five likely to beat the analysts’ consensus estimate and another five likely to fall short.
Interested in learning how you can use the StarMine SmartEstimate® and Predicted Surprise® to avoid earnings misses and find earnings beats? Learn more here.
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