Big earnings surprises lead to big moves

The earning season is on and it is time to look for big earnings surprises.

There are many surprises during the earnings season but only few are genuine game changer. A Game changing earnings is when the earnings signals start of a new growth period lasting 3 to 6 quarters for the company. It tells you something is going right for this company.

In case of a growth company this kind of game changing earnings shows significant growth acceleration or profit acceleration. The important thing to research in this kind of situation is the sustainability of the earnings for few quarters. If that happens and if the stock was not rallying prior to earnings you have a potential double bagger ahead of you if it is small or mid size company . For large cap it means probable 25 to 50% mover.

In case of a turnaround stock the game changing earnings signal a back to sustained profitability for the company. Again the key thing to look for is whether this is one quarter phenomenon or real turn around. In turnaround kind of situation you may not have good sales growth . but it is earnings that matter. In many turnaround management fixes business by cutting cost or changing product mix.

In recent years DPZ is good example of this kind of sustainable turnaround. From its first big earnings surprise some 12 quarter or so again, it has never looked back. A new management and revamped product did that SBUX is another example of this in last 3 years.

Last earnings season the big game changing earnings play was FB . It has gone up 50% plus since its earnings day breakout. That earnings was game changer. It showed new growth impulse for the company in mobile segment. The catalyst has legs to continue for 3 to 4 quarters.

Finding game changing earnings is easy if you have a process flow for that. Most of the real big game changers are so apparent that even a blind person can find them. The Stockbee Episodic Pivots method offers one systematic way to find it.

During earnings season spending just 10 minutes daily on looking for big game changing catalyst stock can help you find the big movers in the market.

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