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Number Cruncher

Distilling a flood of earnings forecasts Add to ...

What are we looking for?

Early indicators of earnings strength or weakness ahead of quarterly financial results.

More about today’s screen

This is a list of the 29 largest publicly listed companies in Canada by market value. With the exception of the big banks, which begin reporting second-quarter numbers next week, they have all passed through the latest earnings season. We list the number of days until each reports again in the sixth column.

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The screen’s numbers come from StarMine, a Thomson Reuters service that ranks analysts and gathers earnings estimate data to which it applies proprietary research to detect momentum and other factors.

One such measurement is called StarMine Smart Estimate, which is a proprietary blend of analysts’ estimates that aims to more accurately forecast upcoming results than the consensus mean estimate. Smart Estimate gives a weighting to each analyst’s estimate according to his or her past accuracy. It also gives greater emphasis to the timeliest forecasts and less to those that have not been updated for a lengthy period.

Our screen lists the degree of change, up or down, in both the mean estimate and the Smart Estimate for each company’s EPS this year, measured as a percentage of the original forecast. These columns give an idea of which way momentum is going for the stock. Most of the companies listed show only small changes.

The percentage difference between the Smart Estimate and the consensus estimate of the Street produces another StarMine metric called the Predicted Surprise. Stocks with positive surprises tend to have above-average price performance. Stocks with negative surprises tend to underperform the market, according to StarMine.

What we found

The results are ranked according to Predicted Surprise values. There is very little discrepancy between the Street’s mean estimates and StarMine’s estimates for most of these stocks. But Talisman Energy, Encana and Kinross Gold are outliers at the positive end. Bank of Montreal and Potash Corp. of Saskatchewan show modest but noticeable negative surprises.

It’s interesting to note that neither the top group nor the bottom group of stocks have received a disproportionate number of upgrades or downgrades by analysts. In fact, both BMO and Potash Corp. have been upgraded during the last 90 days, and Encana has received two downgrades.

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