The market expects Citizens Financial Services (CZFS) to record lower year-over-year profits on weaker revenues when it releases results for the quarter ended September 2021. This consensus outlook widely known is important in assessing a company’s earnings position, but a powerful factor that could influence its stock price in the short term is how actual results compare to those estimates.
The action could rise 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. positive BPA.
Zacks consensus estimate
The bank is expected to post quarterly earnings of $ 1.74 per share in its next report, which represents a year-on-year change of -13.9%.
Revenue is expected to reach $ 19.4 million, down 3.1% from the prior year quarter.
Trend of estimated revisions
The consensus EPS estimate for the quarter has been revised 0.87% up in the past 30 days to the current level. This essentially reflects how hedge analysts collectively reassessed their initial estimates during this time period.
Investors should be aware that the direction of revisions to estimates by individual hedge analysts may not always be reflected in the overall change.
Price, consensus and EPS Surprise
Whisper of gains
Revisions to estimates before a company’s results are released provide clues to economic conditions for the period in which the results are published. Our exclusive surprise prediction model – the Zacks ESP on earnings (Surprise Prediction Expected) – this idea is at the heart of this idea.
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 earnings release 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 actions with this combination produce a positive surprise almost 70% of the time, and a solid Zacks ranking actually increases the predictive power of ESP 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 a profit beat 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 citizens’ financial services?
For Citizens Financial Services, the more accurate estimate is lower than Zacks’ consensus estimate, suggesting that analysts have recently turned bearish on the company’s earnings outlook. This resulted in an ESP on earnings of -4.02%.
On the other hand, the action currently carries a Zacks rank of # 2.
Thus, this combination makes it difficult to predict conclusively that Citizens Financial Services will beat the consensus EPS estimate.
Does the history of earnings surprises contain a clue?
Analysts often look at how well a company has been able to match consensus estimates in the past while calculating their estimates for future profits. So it’s worth taking a look at the surprise history to gauge its influence on the upcoming issue.
For the last reported quarter, Citizens Financial Services was expected to post a profit of $ 1.74 per share when it actually produced a profit of $ 1.69, offering a surprise of -2.87%.
In the past four quarters, the company has twice beaten consensus EPS estimates.
A gain or failure of gains may not be the only basis for upward or downward action. 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 ahead of its quarterly release. Make sure to use our ESP Income Filter to discover the best stocks to buy or sell before they are published.
Citizens Financial Services 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.