Have you been looking for a stock that may be well positioned to maintain its profit margin in the upcoming report? It is worth considering Suncor Energy (SU), which belongs to the Zacks Oil and Gas – Integrated – Canadian industry.

Looking at the last two reports, this energy company has recorded a strong streak of beating earnings estimates. The company has surpassed estimates by an average of 19.52% over the last two quarters.

For the last reported quarter, Suncor Energy came out with earnings of $0.93 per share versus the Zacks Consensus Estimate of $0.76 per share, representing a surprise of 22.37%. For the previous quarter, the company was expected to post earnings of $0.90 per share when it actually produced earnings of $1.05 per share, delivering a surprise of 16.67%.

With this earnings history in mind, recent estimates for Suncor Energy have been higher. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the company is positive, which is a good sign of earnings growth, especially when you combine this metric with the nice Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better deliver a positive surprise nearly 70% of the time. In other words, if you have ten stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.

The Zacks Earnings ESP compares the most accurate estimate to the Zacks Consensus Estimate for the quarter; the most accurate estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts who revise their estimates just before earnings releases have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had previously predicted.

Suncor Energy currently has an Earnings ESP of +0.50%, suggesting that analysts have become optimistic about its near-term earnings potential. When you combine this positive Earnings ESP with the stock’s Zacks Rank #3 (Hold), it shows that a new run may be on the horizon.

If the Earnings ESP turns negative, investors should note that this will reduce the predictive power of the measure. But a negative value is not an indication of a share’s loss of profit.

Many companies end up beating the consensus EPS estimate, but that doesn’t have to be the only basis for their stock’s rise. On the other hand, some stocks may hold up even if they ultimately miss the consensus estimate.

The story continues

Therefore, it is very important to check a company’s Earnings ESP before its quarterly release to increase the chances of success. Make sure you use our Earnings ESP filter to discover the best stocks to buy or sell before they report.

Want the latest recommendations from Zacks Investment Research? Today you can download the 7 best stocks for the next 30 days. Click to get this free report

Suncor Energy Inc. (SU): Free Stock Analysis Report

To read this article on Zacks.com, click here.

Zacks Investment Research