Clarivate PLC (CLVT) Expected to Beat Earnings Estimates: What to Know Ahead of Q3 Release
Clarivate PLC (CLVT) is gearing up for its earnings report for the quarter ending September 2024. Analysts predict that the company will experience a decline in earnings compared to the previous year, largely due to a decrease in revenues. Understanding how the actual results measure up against these forecasts will be crucial in determining the direction of the stock price.
The earnings report is set to be released on November 6, and if the reported earnings exceed analysts' expectations, the stock may see an increase. Conversely, if the results fall short, a decline in stock price could follow.
Management's remarks during the earnings call about business conditions will play a significant role in determining how the stock will react in the short term and how future earnings forecasts may evolve. Thus, it's beneficial to analyze the likelihood of a positive earnings surprise.
Zacks Consensus Estimate
According to the latest projections, Clarivate is expected to report earnings of $0.19 per share, indicating a year-over-year decrease of 9.5%. Additionally, the anticipated revenue for the quarter stands at $640.01 million, down 1.1% from the same period last year.
Estimate Revisions Trend
In the last month, the consensus EPS estimate has been adjusted downward by 1.06%. This adjustment reflects how analysts have revised their initial estimates based on updated information.
It's important to recognize that the changes made by individual analysts may not always match the overall shift in consensus estimates.
Earnings Whisper
Revisions to estimates ahead of an earnings release can provide valuable insight into the company's current business climate. This is a fundamental component of the Zacks Earnings ESP (Expected Surprise Prediction) model.
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a recent update of the consensus EPS prediction, and it carries more weight as it reflects the latest insights from analysts.
A positive Earnings ESP suggests that actual earnings may exceed the consensus estimate. However, this model is most reliable for instances of positive ESP readings.
Stocks with a positive Earnings ESP, particularly when paired with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold), tend to outperform expectations roughly 70% of the time. In fact, having a strong Zacks Rank enhances the predictive ability of the Earnings ESP.
It’s worth noting that a negative Earnings ESP does not necessarily predict an earnings miss, as our research indicates that it is challenging to forecast earnings beats for stocks with negative ESP readings or a Zacks Rank of #4 (Sell) or #5 (Strong Sell).
How Have the Numbers Shaped Up for Clarivate?
For Clarivate, the Most Accurate Estimate sits above the Zacks Consensus Estimate, indicating that analysts have recently adopted a more optimistic outlook concerning the company's earnings. Consequently, Clarivate boasts an Earnings ESP of +2.15%.
Additionally, the stock is currently assigned a Zacks Rank of #3.
This combination suggests that Clarivate is likely to beat the consensus EPS estimate.
Does Earnings Surprise History Hold Any Clue?
Analysts often factor in a company's past performance when setting future earnings estimates. Therefore, examining Clarivate's surprise history can be insightful in predicting upcoming results.
In the last reported quarter, analysts expected Clarivate to deliver earnings of $0.18 per share, but the company reported an actual earnings figure of $0.20, resulting in a positive surprise of +11.11%.
Over the past four quarters, Clarivate has surpassed consensus EPS estimates on three occasions.
Bottom Line
An earnings beat or miss does not always determine a stock's directional movement. Many companies may experience stock price declines even after reporting earnings beats due to various external factors. Conversely, unexpected positive events can lead to price jumps even after an earnings miss.
However, targeting stocks expected to exceed earnings predictions can enhance success probabilities. As such, reviewing a company's Earnings ESP and Zacks Rank prior to its quarterly announcement is a wise strategy. Utilize the Earnings ESP Filter to identify promising stocks for potential investment.
Clarivate stands out as a potential candidate for an earnings beat. Nevertheless, investors are encouraged to consider other relevant elements before making decisions regarding this stock as earnings release approaches.
Stay informed about upcoming earnings announcements through the Earnings Calendar.
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