Tactile Systems Technology (TCMD) Set to Exceed Earnings Expectations: What Investors Need to Know

Tactile Systems Technology (TCMD - Free Report) is anticipated to report a decline in earnings compared to last year, but with a rise in revenues as it approaches its results announcement for the quarter ending September 2024. While the overall consensus regarding the company's earnings provides a snapshot into its financial health, the actual figures presented in the upcoming earnings report will significantly influence the stock’s value in the short term.

The earnings report, set for release on November 4, 2024, could lead to an increase in share price if the reported figures surpass expectations. Conversely, if the results fall short of estimates, the stock might decline.

While management's comments during the earnings call will largely dictate the future trajectory of the stock price and earnings outlook, it’s useful for investors to assess the potential for a positive earnings surprise.

Zacks Consensus Estimate

For the upcoming quarter, Tactile Systems Technology is projected to report earnings of $0.18 per share, which would mark a decrease of 78.8% from the previous year. However, projected revenues for the same quarter stand at $75.94 million, representing a 9.1% increase compared to the same period last year.

Estimate Revisions Trend

The consensus earnings estimate has remained stable over the past 30 days, indicating that analysts have not significantly adjusted their outlook during this time. However, it is essential to note that a collective consensus change does not necessarily reflect individual analyst sentiments.

Earnings Whisper

Revisions to earnings estimates before a reporting period provide insights into the company’s operational conditions. This analysis is fundamental to our proprietary surprise prediction model known as the Zacks Earnings ESP (Expected Surprise Prediction). This model assesses the Most Accurate Estimate against the Zacks Consensus Estimate. The Most Accurate Estimate is the most recent adjustment to the consensus estimate, as analysts may refine their projections based on the latest developments.

The Earnings ESP model suggests that a favorable or unfavorable reading may indicate how the actual earnings will differ from consensus estimates, but its effectiveness is particularly heightened for positive readings.

A positive Earnings ESP is a strong indicator of a potential earnings surprise, especially when paired with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold). Research indicates that stocks featuring this combination tend to outperform expectations approximately 70% of the time. Moreover, a good Zacks Rank increases the predictive reliability of the Earnings ESP.

Conversely, a negative Earnings ESP does not imply a definite earnings miss, as predicting positive surprises becomes challenging for stocks with negative readings or those rated #4 (Sell) or #5 (Strong Sell) in Zacks Rank.

Recent Developments for Tactile Systems Technology

For Tactile Systems Technology, the Most Accurate Estimate has recently risen above the Zacks Consensus Estimate, suggesting a more optimistic outlook from analysts regarding the company's earnings. This optimism has resulted in a favorable Earnings ESP of +7.04%.

Currently, the stock holds a Zacks Rank of #3, which means it may likely surpass the EPS consensus estimate.

Historical Earnings Performance Insights

To gauge a company's capability to meet or exceed consensus expectations, analysts often consider its historical performance. Looking back at the previous quarter, Tactile Systems Technology was projected to earn $0.10 per share but instead reported earnings of $0.20, a substantial surprise of +100%.

In fact, the company has successfully beaten consensus EPS estimates over the last four quarters.

Conclusion

Whether a stock rises or falls following an earnings report typically involves more than just the earnings beat or miss. Numerous factors can lead a stock to decline even after a positive report, while unexpected events can buoy stocks despite poor earnings results.

However, investing in stocks anticipated to surpass earnings expectations can dramatically enhance an investor's chances of success. Therefore, checking a company's Earnings ESP and Zacks Rank prior to the quarterly announcement is advisable. Utilizing resources like the Earnings ESP Filter can help identify promising investment opportunities.

In summary, Tactile Systems Technology shows potential as a candidate for beating earnings expectations. Nevertheless, investors should consider other factors before deciding to invest or withdraw before the earnings release.

Peer Company Earnings Outlook

In the same industry, Waters (WAT - Free Report) is also preparing to report its earnings, with expectations of $2.68 per share for the quarter ending September 2024, reflecting a 5.6% decrease year-over-year. The projected revenue for Waters stands at $714.25 million, a minor increase of 0.4% from the previous year. Despite a slight downward revision in estimates over the last month, Waters has a positive Earnings ESP of 0.04%, paired with a Zacks Rank of #3 (Hold), indicating a good chance it will beat the consensus EPS estimate, as it has consistently done in prior quarters.

Earnings, Stock, Investing