Wall Street expects earnings growth

The market expects PhenixFIN (PFX) to deliver increased year-over-year profits on weaker revenue when it releases results for the quarter ended September 2021. This widely known consensus prospect is important in assessing the earnings position of the company, but a powerful factor that could influence its stock price in the short term is how actual results compare to those estimates.

The stock could move higher if these key figures exceed expectations for the next earnings report. On the other hand, if they run out, the stock may go down.

While management’s discussion of trading conditions when calling for profits will primarily determine the sustainability of the immediate price change and future profit expectations, it is worth having a crippling insight into the chances of a surprise. BPA positive.

Zacks consensus estimate

The investment company is expected to post quarterly earnings of $ 0.05 per share in its next report, which represents a year-over-year change of 115.6%.

Revenue is expected to reach $ 2.92 million, down 33.9% from the prior year quarter.

Trend of estimated revisions

The consensus EPS estimate for the quarter has remained unchanged over the past 30 days. This essentially reflects how hedge analysts collectively reassessed their initial estimates during this time period.

Investors should be aware that an overall change may not always reflect the direction of estimate revisions by individual hedge analysts.

Price, consensus and EPS Surprise

Whisper of gains

Revisions to estimates before a company’s earnings are released provide clues to business conditions for the period in which the results are released. Our exclusive surprise prediction model – the Zacks Earnings ESP (Expected Surprise Prediction) – has this idea at its heart.

Zacks Earnings ESP compares the most accurate estimate to Zacks’ consensus estimate for the quarter; most accurate estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts who revise their estimates just before the results are released have the latest information, which could potentially be more accurate than they and other consensus contributors predicted earlier.

Thus, a positive or negative ESP reading of earnings theoretically indicates the likely deviation of actual earnings from the consensus estimate. However, the predictive power of the model is only significant for positive ESP readings.

A positive ESP on earnings is a good predictor of a pace of earnings, especially when combined with a Zacks # 1 (strong buy), 2 (buy), or 3 (hold) ranking. Our research shows that stocks with this combination produce positive surprise almost 70% of the time, and a strong Zacks ranking actually increases the predictive power of ESP for earnings.

Please note that a negative ESP reading of earnings is not indicative of a shortfall. Our research shows that it is difficult to predict an increase in earnings with any degree of confidence for stocks with negative earnings ESP readings and / or a Zacks ranking of 4 (sell) or 5 (strong sell).

How have the numbers evolved for PhenixFIN?

For PhenixFIN, the most accurate estimate is the same as Zacks ‘consensus estimate, suggesting that there are no recent analysts’ opinions that differ from what has been considered to derive the ‘consensus estimate. This resulted in an ESP on earnings of 0%.

On the other hand, the action currently carries a Zacks rank of # 3.

Thus, this combination makes it difficult to predict conclusively that PhenixFIN will beat the consensus estimate of BPA.

Does the history of earnings surprises contain a clue?

When calculating estimates of a company’s future earnings, analysts often consider how well it has been able to match past consensus estimates. So it’s worth taking a look at the surprise history to gauge its influence on the upcoming issue.

For the last published quarter, it was predicted that PhenixFIN would post a profit of $ 0.03 per share when it actually produced a profit of $ 2.02, delivering a surprise of + 6,633.33%.

In the past four quarters, the company has twice beaten consensus EPS estimates.

Final result

A gain or failure of gains may not be the only basis for a stock to move higher or lower. Many stocks end up losing ground despite declining earnings due to other factors that disappoint investors. Likewise, unforeseen catalysts help a number of stocks win despite a shortfall.

That said, betting on stocks that are expected to exceed profit expectations increases the chances of success. That’s why it’s worth checking out a company’s ESP results and Zacks rankings before it’s released quarterly. Be sure to use our ESP Earnings Filter to uncover the best stocks to buy or sell before they get published.

PhenixFIN does not appear to be a compelling candidate in terms of earnings. However, investors should also pay attention to other factors when betting on this stock or staying on the sidelines before its results are released.

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