Earnings Surprise
- Posted by ZorTrades
- on March 6th, 2012
With the market finally pulling back and giving the market participants the pullback they have been begging for it might be time to focus on some PEAD stocks: Post Earnings Announcement Drift; “Post Earnings Announcement Drift (PEAD) is the tendency for a stock’s cumulative abnormal returns to drift in the direction of an earnings surprise for several weeks (even several months) following an earnings announcement.” In other words, stocks that have completely surprise the street with their earnings tend to move in the underlying EPS direction move until the following quarter. Based on the gap up that $RAIL and $DDD exhibited after their EPS release, it is safe to assume that the street was surprised with their results.
RAIL; EPS change last quarter= +345%, earnings surprise +446%, EPS estimate % change for current year +360%, sales change last quarter +267%.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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Frank Zorrilla is the founder and chief investment officer of Zor Capital LLC.He began his Wall Street career 10 days after his 20th birthday when he became a Series 7 licensed stock broker. More »
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