Network based systems

Why Perion Network (PERI) Could Beat Earnings Estimates Again


If you’re looking for a stock that has a solid track record of beating earnings estimates and is in a good position to hold the trend in its upcoming quarterly report, you should consider Perion Network (PERI). This company, part of the Zacks Internet – Content industry, shows potential for another beat in earnings.

This digital media company has an established record of exceeding earnings estimates, especially when looking at the previous two reports. The company claims an average surprise for the last two quarters of 44.70%.

Last quarter, Perion Network was expected to report earnings of $0.41 per share, but instead reported $0.51 per share, which is a surprise 24.39%. For the prior quarter, the consensus estimate was $0.20 per share, when it actually yielded $0.33 per share, a 65% surprise.

Price and Surprise EPS

With this earnings history in mind, recent estimates have risen for Perion Network. In fact, the Zacks ESP Earnings (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 ranking.

Our research shows that stocks with the combination of a positive ESP on earnings and a Zacks rank of #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 exceeded 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 tied to change. The idea here is that analysts revising their estimates just before a publication of results have the most up-to-date information, which could potentially be more accurate than they and other consensus contributors had predicted earlier.

Perion Network currently has an earnings ESP of +10.58%, suggesting that analysts have recently become optimistic about the company’s earnings outlook. This positive ESP on earnings, when combined with the Zacks rank #2 (buy) of the stock, indicates that another beat may be around the corner.

When the ESP of earnings turns negative, investors should note that this will reduce the predictive power of the metric. But, a negative value is not indicative of a stock’s loss of profit.

Many companies end up beating the consensus EPS estimate, though that’s not the only reason their stocks gain. Additionally, some stocks may remain flat even if they end up missing the consensus estimate.

For this reason, it is really important to check a company’s earnings ESP before its quarterly release to increase the chances of success. Be sure to use our Income ESP Filter to discover the best stocks to buy or sell before they are released.

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Perion Network Ltd (PERI): Free Stock Analysis Report

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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.

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