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Number Cruncher

Poor profit momentum is a warning sign Add to ...

What are we looking for?

With earnings season upon us, yesterday we looked for stocks that should have strong quarters. Today, we'll do the opposite.

Today's search

We'll turn to StarMine for help again. It is a service that ranks analysts and provides lots of data about earnings estimates.

We'll use the StarMine Indicator, which ranks stocks from 1 to 100 based on three earnings criteria: 1) StarMine finds the analysts that have predicted surprises in the past and then sees if they are projecting more; 2) Recent increases to earnings estimates by analysts for the current quarter and year; 3) Positive changes in analyst recommendations.

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We'll screen Canadian stocks that have a StarMine Indicator at the bottom of the range. Stocks are ranked from 1 (lowest) to 100. We'll look for Canadian-listed firms with market capitalizations greater than $250-million that are covered by at least three analysts.

So what did we turn up?

Most of the companies on this table have had earnings estimates cut drastically in the past couple months.

Their earnings momentum hasn't hurt the stocks in the past three months however, as the market is up sharply and has bid up deep-value stocks.

You have to wonder though if these stocks will reverse direction if they produce a poor quarter. Have a look at the column called 'Smart estimate EPS this quarter' and compare it with 'Mean estimate EPS this quarter.' This is where StarMine figures out which analysts have been good at predicting earnings in the past and isolates them in a Smart Estimate.

Several stocks have Smart Estimates that are lower than the mean estimate on the Street.

Those companies include Migao Corp., Extreme Coil Drilling Corp. and ATS Automation Tooling.

Follow on Twitter: @ScottAdams_Edit

 

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