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Investors are always looking for stocks that are likely to win at the end of the financial year. Spotify Technology SA (spot), may be one such company. The company is soon to be profitable and the events in the report are shaping up very well.
This is due to Spotify’s recent fondness for profit forecast correction activity, which usually portends a profit beat. After all, the analyst’s raising estimates just before earnings, using the most up-to-date information possible, indicates that there are some favorable trends beneath the surface of her SPOT for this report. A pretty good indicator.
In fact, the most accurate estimate for the quarter currently sees SPOT losing 79 cents per share, while Zacks Consensus estimates a loss of $1.04 per share. This suggests that analysts have raised their SPOT estimates very recently, giving the stock a +24.28% Zacks Earnings ESP heading into earnings season.
Spotify Technology Pricing and EPS Surprise
Spotify Technology Price-eps-surprise | Spotify Technology Quotes
why is this important?
Zacks Earnings ESP positive readings have proven to be very powerful in creating positive surprises and outperforming the market. In a recent 10-year backtest, stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or higher show positive surprises nearly 70% of the time, averaging more than 28% annualized returns. (see below). Learn more about the top-earning ESP stocks here).
Given that SPOT is #2 on the Zachs Rank (buy) and ESP is in positive territory, investors might want to consider this stock before earnings. A complete list of Zacks #1 (Strong Buy) Rank stocks for today can be found here.
Clearly, the recent earnings forecast revisions suggest good things are in store for Spotify, indicating that there could be a beat in the cards for the next report.
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