What you need to know ahead of the Q2 release

Expected Hims & Hers Health, Inc. (HIMS) to post a year-over-year decline in earnings on higher revenue when it reports results for the quarter ended June 2022. This widely known consensus outlook gives a good picture of the company’s earnings picture, but how the actual results compare to those forecasts is a powerful factor that can affect the stock price in the short term.

The earnings report, which is expected to be released on August 8, 2022, could help the stock move higher if these key numbers are better than expected. On the other hand, if they miss, the stock could go lower.

While the sustainability of immediate price change and future earnings expectations will depend mostly on management’s discussion of business conditions on the earnings call, it is worth reducing the likelihood of a positive EPS surprise.

Zacks Consensus Estimate

This company is expected to report a quarterly loss of $0.10 per share in its upcoming report, representing a year-over-year change of -25%.

Revenue is expected to be $101.85 million, up 67.8% from the previous quarter.

Trend of rating revisions

The consensus EPS estimate for the quarter has been revised 4.35% lower over the past 30 days to the current level. This is essentially a reflection of how covering analysts have collectively re-evaluated their initial estimates over this period.

Investors should note that the aggregate change may not always reflect the direction of revisions to estimates by each of the covering analysts.

Earnings Whisper

Forecast revisions prior to the release of a company’s results offer an indication of business conditions for the period whose results are released. Our proprietary surprise forecasting model – Zacks Earnings ESP (Expected Surprise Forecast) – has this insight at its core.

The Zacks Earnings ESP compares the top estimate to the Zacks Consensus Estimate for the quarter; the most accurate estimate is a newer version of the Zacks Consensus EPS estimate. The idea here is that analysts who revise their estimates just before the earnings release have the latest information, which could potentially be more accurate than what they and other contributors to the consensus had previously predicted.

Thus, a positive or negative earnings ESP reading theoretically indicates the likely deviation of actual earnings from the consensus estimate. However, the predictive power of the model was significant only for positive ESP readings.

A positive earnings ESP is a strong predictor of earnings outperforming, especially when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination deliver a positive surprise almost 70% of the time, and a solid Zacks Rank actually increases the predictive power of ESP earnings.

Please note that a negative earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict earnings growth with any degree of confidence for stocks with negative earnings ESP readings and/or a Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How the numbers shaped up for Hims & Hers Health, Inc.

About Hims & Hers Health, Inc. The Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts are recently bullish on the company’s earnings prospects. This resulted in an ESP of earnings of +1.96%.

On the other hand, the stock currently carries a Zacks Rank #3.

So, this combination shows that Hims & Hers Health, Inc. most likely to beat consensus EPS estimate.

Does the earnings story surprise any clue?

Analysts often consider how well a company has managed to match consensus estimates in the past when calculating their forecasts for future earnings. So it’s worth looking at the history of the surprise to gauge its impact on the upcoming number.

For the last reported quarter, Hims & Hers Health, Inc. was expected to to report a loss of $0.09 per share when it actually resulted in a loss of $0.08, delivering a +11.11% surprise.

Over the past four quarters, the company has beaten consensus EPS estimates three times.

Bottom row

Earnings overshoots or misses may not be the only basis for a stock to move up or down. Many stocks end up losing ground despite earnings growth due to other factors that frustrate investors. Likewise, unforeseen catalysts are helping a number of stocks rise despite a lack of earnings.

However, betting on stocks that are expected to beat earnings expectations does increase the odds of success. That’s why it’s worth checking the company’s Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure you use our ESP Earnings Filter to find the best stocks to buy or sell before they are reported.

Hims & Hers Health, Inc. looks like a compelling candidate that’s better than earnings. However, investors should also pay attention to other factors to bet on this stock or stay away from it before the earnings release.

Expected results of a player in the industry

Among the stocks in the Zacks Medical Info Systems industry, Omnicell (OMCL) is soon expected to report earnings of $0.85 per share for the quarter ending June 2022. This estimate indicates a year-over-year change of -12.4%. Revenue for this quarter is expected to be $339.43 million, up 24.5% from last year’s quarter.

The consensus EPS estimate for Omnicell has been revised 2.6% higher over the past 30 days to the current level. However, a lower best estimate resulted in a gain ESP of -3.53%.

When combined with a Zacks Rank #3 (Hold), this earnings ESP makes it difficult to confidently predict that Omnicell will beat the consensus EPS estimate. Over the past four quarters, the company has beaten consensus EPS estimates three times.

Keep up with upcoming earnings announcements with the Zacks Earnings Calendar.

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