Will Allison Transmission (ALSN) Beat Estimates Again in Its Next Earnings Report?

If you are searching for a stock that has a solid track record of exceeding earnings estimates and appears well-equipped to continue this trend in its next quarterly report, Allison Transmission (ALSN) might be a strong candidate to consider.

Strong Earnings Track Record

Allison Transmission, which operates in the Zacks Automotive - Original Equipment sector, has consistently shown impressive performance when it comes to earnings. Over the last couple of earnings reports, the company has successfully exceeded expectations.

Specifically, in the latest reported quarter, Allison Transmission achieved earnings of $2.13 per share, surpassing the Zacks Consensus Estimate of $2.04 per share, which marked a surprise of 4.41%. In the prior quarter, the company was expected to deliver earnings of $1.88 per share but instead reported $1.90, resulting in a smaller beat of 1.06%.

Favorable Changes in Earnings Estimates

This consistent history of outperforming estimates has led to a positive shift in earnings projections for Allison Transmission. Currently, the Zacks Earnings ESP (Expected Surprise Prediction) for the stock is favorable, which bodes well for a potential earnings beat, especially when paired with its respectable Zacks Rank.

Research indicates that stocks possessing a positive Earnings ESP along with a Zacks Rank of #3 (Hold) or better achieve a positive surprise almost 70% of the time. In simpler terms, out of 10 stocks fitting this profile, approximately seven may exceed their consensus estimates.

Understanding Earnings ESP

The Zacks Earnings ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate for a given quarter. The Most Accurate Estimate takes into account the most recent adjustments made by analysts, providing the latest information, which is often more precise than earlier predictions.

At present, Allison Transmission boasts an Earnings ESP of +1.20%. This suggests that analysts are becoming increasingly optimistic about the company's short-term earning potential. By combining this positive Earnings ESP with a Zacks Rank of #3 (Hold), the likelihood of another earnings beat seems promising. The next earnings report is scheduled for October 29, 2024.

What If Earnings ESP is Negative?

It's essential to recognize that a negative Earnings ESP can diminish its predictive capability. However, a negative figure does not necessarily mean the company will miss its earnings target.

Many firms manage to outperform the consensus EPS estimate, but this success is not the only factor that influences their stock prices. Conversely, some stocks may hold steady even after reporting a miss against the consensus estimate.

The Importance of Earnings ESP

Given these points, checking a company's Earnings ESP before its quarterly release is crucial for enhancing the chance of success. Utilizing an Earnings ESP Filter can help identify the best stocks for potential buying or selling before they announce their earnings.

Earnings, Estimates, Stock