What are we looking for?
TSX-listed large cap companies expected to continue to garner positive reviews from Street analysts.
The screen
Thomson Reuters' Analyst Revisions Model is a stock ranking model that predicts future changes in analyst sentiment by using proprietary SmartEstimates, which essentially overweight the estimates of analysts who are more timely and accurate. The model incorporates estimates on revenue, earnings and takes into account changes in analyst recommendations. The premise of the model is that past revisions are highly predictive of future revisions and in turn, are highly correlated to stock price movements. This model issues scores using percentiles with the lowest score being 0 and the highest at 100.
Our screen begins by identifying companies trading in Canada with a market capitalization above $3-billion. From here, we're looking for companies that will be announcing quarterly earnings within the next 60 days. Finally, we're applying a filter for companies that have an Analyst Revisions Model score in the 90th percentile or higher.
More about Thomson Reuters
Thomson Reuters delivers trusted news and intelligent information to more than one billion people in 140 countries every day. Our content, software and technology support the way professionals work in a rapidly changing, ever more complex world. Thomson Reuters Eikon is the platform used by financial and corporate clients to access top research, portfolio analytics, charting and screening for every asset class.
What did we find?
Using Thomson Reuters Eikon, our screen identified 14 companies that meet the screen criteria. Sorting the list by Analyst Revisions Model scores in descending order, Teck Resources tops the list with a score of 100.
Teck is a diversified mining company that is in the business of exploring for, acquiring, developing and producing natural resources including steel-making coal, copper, zinc and energy.
According to the price-to-price target ratio, the stock is trading slightly above its mean target price (a ratio of 1.0 would indicate the current trading price and the consensus target price are the same) and has a mean recommendation of hold. Year to date, the stock has advanced an astonishing 414 per cent – largely due to increasing coal and zinc prices. The company is slated to announce third-quarter earnings on Thursday. According to analyst estimates, consensus earnings per share for the quarter is 27 cents however Thomson Reuters' SmartEstimate EPS is 29 cents.
This commentary does not provide individualized advice or recommendations for any specific subscriber or portfolio. Investors should conduct further research before investing.
Patrick Gattuso, CFA, works in the financial and risk unit of Thomson Reuters and specializes in asset management.