Send me real-time posts from this site at my email
Zacks

Why Century Communities (CCS) Could Beat Earnings Estimates Again

Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report? Century Communities (CCS), which belongs to the Zacks Building Products - Home Builders industry, could be a great candidate to consider.

When looking at the last two reports, this single-family homebuilder has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 48.45%, on average, in the last two quarters.

For the last reported quarter, Century Communities came out with earnings of $1.21 per share versus the Zacks Consensus Estimate of $0.73 per share, representing a surprise of 65.75%. For the previous quarter, the company was expected to post earnings of $0.61 per share and it actually produced earnings of $0.80 per share, delivering a surprise of 31.15%.

Price and EPS Surprise

With this earnings history in mind, recent estimates have been moving higher for Century Communities. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the company is positive, which is a great sign of an earnings beat, especially when you combine this metric with its nice Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat 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 related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Century Communities has an Earnings ESP of +7.53% at the moment, suggesting that analysts have grown bullish on its near-term earnings potential. When you combine this positive Earnings ESP with the stock's Zacks Rank #1 (Strong Buy), it shows that another beat is possibly around the corner. The company's next earnings report is expected to be released on October 28, 2020.

Investors should note, however, that a negative Earnings ESP reading is not indicative of an earnings miss, but a negative value does reduce the predictive power of this metric.

Many companies end up beating the consensus EPS estimate, though this is not the only reason why their shares gain. Additionally, some stocks may remain stable even if they end up missing the consensus estimate.

Because of this, it's really important to check a company's Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Century Communities, Inc. (CCS): Free Stock Analysis Report
 
To read this article on Zacks.com click here.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue