That is because Preferred Bank is seeing favourable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. After all, analysts raising estimates right before earnings—with the most up-to-date information possible—is a pretty good indicator of some favourable trends underneath the surface for PFBC in this report.
In fact, the Most Accurate Estimate for the current quarter is currently at 47 cents per share for PFBC, compared to a broader Zacks Consensus Estimate of 44 cents per share. This suggests that analysts have very recently bumped up their estimates for PFBC, giving the stock a Zacks Earnings ESP of 6.82% heading into earnings season.
Why is this Important?
A positive reading for the Zacks Earnings ESP has proven to be very powerful in producing both positive surprises, and outperforming the market. Our recent 10 year back test shows that stocks that have a positive Earnings ESP and a Zacks Rank #3 (Hold) or better show a positive surprise nearly 70% of the time, and have returned over 28% on average in annual returns (see more Top Earnings ESP stocks here).
Given that PFBC has a Zacks Rank #1 (Strong Buy) and an ESP in positive territory, investors might want to consider this stock ahead of earnings. Clearly, recent earnings estimate revisions suggest that good things are ahead for Preferred Bank, and that a beat might be in the cards for the upcoming report.
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