Will RLI Corp. (RLI) Beat Estimates Again in Its Next Earnings Report?

Investors looking for a stock with strong potential to continue its streak of beating earnings estimates might want to look at RLI Corp. (RLI). This company operates within the Zacks Insurance - Property and Casualty industry and has shown impressive performance in its past earnings reports.

RLI Corp. has consistently delivered earnings that surpass expectations. In fact, it has maintained an exceptional record of beating earnings estimates during the last two quarterly reports. The company's average earnings surprise over the past two quarters stands at a remarkable 30.54%.

To provide a clearer picture, let’s review RLI Corp.’s last reported quarter, where the company announced earnings of $1.31 per share, significantly higher than the Zacks Consensus Estimate of $0.98 per share. This resulted in a surprise of 33.67%. The quarter before that, analysts anticipated earnings of $1.35 per share, but RLI Corp. outperformed this expectation by posting earnings of $1.72 per share, leading to a surprise of 27.41%.

Price and EPS Surprise

This impressive history has led to favorable shifts in earnings estimates for RLI Corp. very recently. Currently, the Zacks Earnings ESP (Expected Surprise Prediction) for the stock is positive, which is a strong indicator of a potential earnings beat. This suggests that analysts hold an optimistic view of the company’s future earnings, particularly when this favorable sentiment is paired with a solid Zacks Rank.

Research indicates that stocks with both a positive Earnings ESP and a Zacks Rank of #3 (Hold) or better have a success rate of nearly 70% when it comes to surprising positively against consensus estimates. In practical terms, under these criteria, if 10 stocks are assessed, up to seven may exceed the expected earnings.

The Zacks Earnings ESP measures the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. The Most Accurate Estimate is derived from recent changes in analyst estimates, reflecting the most current insights that analysts have prior to an earnings release.

Presently, RLI Corp. has an Earnings ESP of +13.92%, indicating that analysts are optimistic about the company’s earnings prospects. Pairing this with a Zacks Rank of #3 (Hold) hints at the possibility that RLI Corp. may deliver another earnings beat in its next report, expected on January 22, 2025.

However, it is necessary for investors to understand that a negative Earnings ESP does not guarantee an earnings miss, but it does lessen the predictive power of this metric.

Beating consensus EPS estimates is not the sole reason for share price increases, as a stock can remain stable even if it underperforms against expectations. Therefore, checking a company's Earnings ESP ahead of its quarterly release can significantly enhance the chances of making informed investment decisions. Utilizing tools like the Earnings ESP Filter can help identify the best stocks to consider before earnings reports.

Earnings, Estimates, RLI