TPI Composites (TPIC) May Report Negative Earnings: Know the Trend Ahead of Next Week's Release

As TPI Composites (TPIC) prepares to release its earnings results for the quarter ending September 2024, Wall Street anticipates a year-over-year increase in earnings, despite lower revenues. This commonly shared outlook is essential for understanding the company's earnings dynamics, but how the actual outcomes align with these estimates may significantly influence TPIC's stock price in the short term.

The earnings report is set to be disclosed on November 7, 2024. If the figures exceed expectations, it could lead to a rise in stock prices. Conversely, falling short of these expectations might adversely impact the stock's value.

Management's commentary on current business conditions during the earnings call will play a critical role in determining the immediate price movements and future earnings predictions. Therefore, having insights into the likelihood of a positive earnings surprise is beneficial.

Zacks Consensus Estimate

TPI Composites is projected to record a quarterly loss of $0.19 per share, indicating a remarkable year-on-year improvement of 88.9%. Revenue forecasts predict a decline to $346.91 million, reflecting a decrease of 7% compared to the same quarter last year.

Estimate Revisions Trend

Over the past 30 days, analysts have revised the consensus EPS estimate down by 28.57%. This suggests that analysts are reassessing their earlier predictions regarding the company's earnings appraisal.

It's crucial to acknowledge that the trend of estimate revisions for each analyst may not always influence the overall adjustment.

Earnings Whisper

Estimate revisions occurring just before an earnings release can provide insights into business performance in the relevant period. This concept is pivotal to the proprietary Earnings ESP (Expected Surprise Prediction) model.

The Earnings ESP compares the Most Accurate Estimate with the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate reflects more recent analyst evaluations. Analysts changing their estimates shortly before earnings reveals current insights, which might differ from prior consensus figures.

A positive Earnings ESP suggests a higher likelihood of earnings exceeding expectations, particularly when combined with strong Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold). Research indicates that stocks with this combination tend to produce positive surprises around 70% of the time. A strong Zacks Rank boosts the predictive accuracy of the Earnings ESP.

Conversely, a negative Earnings ESP does not firmly indicate an earnings miss, as it becomes more challenging to forecast an earnings beat for stocks exhibiting negative Earnings ESP readings or holding a Zacks Rank of #4 (Sell) or #5 (Strong Sell).

How Have the Numbers Shaped Up for TPI Composites?

For TPI Composites, the Most Accurate Estimate is below the Zacks Consensus Estimate, indicating a bearish sentiment among analysts regarding the company's earnings outlook. This situation results in an Earnings ESP of -49.62%.

Additionally, with a Zacks Rank of #4, predicting a beat against the consensus EPS estimate appears challenging.

Does Earnings Surprise History Hold Any Clue?

Analysts frequently consider a firm's historical ability to meet consensus estimates while forecasting future earnings. A review of TPI Composites' earnings surprise history can provide insights into the current situation.

In the previous quarter, analysts expected TPI Composites to report a loss of $0.69 per share; however, the company reported a more substantial loss of $1.23, resulting in a surprise of -78.26%. Over the last four quarters, TPI Composites has only exceeded consensus EPS estimates once.

Bottom Line

An earnings surprise—whether positive or negative—does not solely determine a stock's movement. Many companies can decline in value despite reporting better-than-expected results due to other investor disappointments. Conversely, unexpected positive factors can drive others higher even with earnings misses.

Regardless, investing in stocks expected to outperform earnings estimates enhances the likelihood of favorable outcomes. Therefore, checking a company's Earnings ESP and Zacks Rank before earnings announcements is prudent. Make use of the Earnings ESP Filter to identify the best stocks for buying or selling prior to their earnings report.

While TPI Composites does not presently appear to be a strong candidate for an earnings beat, investors should monitor additional factors when considering whether to invest in the stock or avoid it leading up to the earnings release.

An Industry Player's Expected Results

In the same industrial services sector, DMC Global (BOOM) is projected to report a loss of $0.09 per share for the quarter ending September 2024, a year-over-year decline of 118%. Revenue expectations are set at $152 million, which is an 11.7% decrease from last year's figures.

In the last 30 days, the consensus EPS estimate for DMC Global has decreased by 109.5%. Simultaneously, the company currently holds an Earnings ESP of -100.00%, which reflects a more pessimistic outlook among analysts. Coupled with a Zacks Rank of #4 (Sell), forecasting an EPS beat for DMC Global remains problematic. The company has surpassed consensus EPS estimates in two out of the last four quarters.

Keep informed about upcoming earnings announcements with an earnings calendar.

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