Earnings season has arrived, with last Friday’s big bank results shifting the period into a much higher gear. The period looks to be positive, with earnings growth expected to be strong, again underpinned by a strong forecasted showing from the Tech sector.

Concerning looming surprises, Wingstop (WING - Free Report), Badger Meter (BMI - Free Report), and Packaging Corporation of America (PKG - Free Report) could deliver just that, with each boasting a positive Earnings ESP Score and a favorable Zacks Rank.

Zacks Earnings ESP (Expected Surprise Prediction) finds companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is generally more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.

The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our ten-year backtest.

But how do expectations stack up heading into the releases? Let’s take a closer look.

Wingstop
 

WING shares have been notably strong in 2024 on the back of better-than-expected results, up 50% and widely outperforming relative to the S&P 500. As shown below, the results have kept shares in a consistent uptrend.

Image Source: Zacks Investment Research

Analysts’ revisions have remained positive, with the $0.79 Zacks Consensus EPS estimate up 11% over the last few months and suggesting year-over-year growth of nearly 40%. Revenue expectations have moved similarly, with the $142 million expected up nearly 8% over the same timeframe.

Image Source: Zacks Investment Research

The company reports on July 31 before the market opens.

Badger Meter
 

BMI shares have also seen strong price action year-to-date, gaining 28% compared to the S&P 500’s 20% move. No different than WING, better-than-expected quarterly results had shares soaring following its latest quarterly release.

Concerning the latest print, BMI posted earnings and revenue growth rates of 50% and 23%, respectively, helping explain the outsized move post-earnings. Below is a chart illustrating the company’s revenue on a quarterly basis.

Image Source: Zacks Investment Research

BMI’s cash-generating abilities have also seen a nice boost, with free cash flow of $18.8 million throughout its latest period soaring 37% year-over-year. Improved cash generation can help support its quarterly dividend, currently yielding a modest 0.6% annually.

The company reports on July 19 before the market opens.

Packaging Corporation of America
 

PKG shares have modestly lagged relative to the S&P 500 in 2024, gaining 15%. The stock faced modest pressure following its latest release but has since recovered nicely, with buyers stepping up.

Top line revisions have been similarly positive, with the $2.0 billion quarterly sales estimate climbing 3.5% over the last several months. Sizable growth is expected, with earnings and revenue forecasted to climb 29% and 14%, respectively.

Image Source: Zacks Investment Research

It’s worth noting that the stock is heading into the release at somewhat rich multiples, with the current 22.3X forward 12-month earnings multiple well above the 16.4X five-year median and just beneath five-year highs of 23.7X.

Image Source: Zacks Investment Research

Bottom Line
 

The highly-awaited Q2 earnings season has arrived, and the big banks’ results have really kicked the period into high gear.

And concerning earnings positivity, all three companies above – Wingstop, Badger Meter, and Packaging Corporation of America – could all bring precisely that, with each carrying a favorable Zacks Rank and a positive Earnings ESP score.

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