Shares of ACCO Brands Corporation (NYSE:ACCO) have been experiencing an accelerated earnings and sales growth over the past 5 years. Over that time frame the firm has seen earnings growth of 9.00% and sales growth of 1.90%.
Investors are often dealing with the decision of whether to sell a stock that has been a solid performer or hold on to it for more profit. This can be almost as trying as deciding when to buy a certain stock. Once investors have latched on to a certain stock, they may find it hard to let go. On the flip side, investors may also have to deal with cutting ties with a losing stock. With both scenarios, it may be important for investors to try to keep emotion out of the decision making process. Investors may feel that giving up on a losing stock can be admitting that a mistake was made. No matter what the circumstance, not letting go of a losing stock may lead to poor portfolio performance in the long run. Constantly keeping a close watching on fundamental and technical data can provide important information needed to stay afloat in the equity markets.
While the firm has enjoyed the upward movement, it’s important to look at analyst expectations and where the company is headed from here. On a consensus basis, analysts are projecting EPS growth of 12.89% for next year and have a $12.40 one year price target on the stock. The stock recently traded at $8.69.
Six Fundamental Characteristics of Great Growth Stocks
#6 Huge Mass Markets - The more potential customers there are, the greater the possibility that both the company, and the investment in said company, will be a success.
#5 Market Dominance/Barriers to Entry – Look for companies who hold patents. This is great barrier to entry, ensuring no competition. Look for companies who dominate the market, blowing away the competition, though market dominance can be harder to measure.
#4 Accelerating Earnings Growth - If a company’s earnings growth rate increases for two consecutive quarters, their growth is accelerating. Faster growth is better growth, and a company whose earnings growth rate is accelerating is an attractive investment.
#3 Triple-Digit Revenue Growth - Companies growing their revenues at triple-digit rates (100% or better) are usually smaller and less known, making them attractive for buying by institutions.
#2 High Profit Margins - In recent decades, high-margin stocks have beaten low-margin stocks by a huge amount.
#1 Top Notch, Innovative Management - All great managers who led their companies to success usually did so by thinking differently. There is no surefire and quick measurement of management talent. When you find a top manager, one with a record of prior success and accolades, you should strike. Top managers usually find a way to overcome obstacles.
Let’s take a look at how the stock has been performing recently. Over the past twelve months, ACCO Brands Corporation (NYSE:ACCO)‘s stock was 26.25%. Over the last week of the month, it was 4.14%, 30.89% over the last quarter, and -25.57% for the past six months.
Earnings Per Share (EPS):
EPS is what each share is worth and indicates how much money their sharehoders would acquire if the company was to pay out all of its profits. Earnings Per Share is computed by dividing the profit total by its share total. If a company’s profit is $800 million and there are 40 million shares, then the EPS is $20. EPS is a fantastic way to compare and contrast companies in the same industry. When a company shows a steady upwards earnings trend, it is a good indicator that the company will dominate companies with a more volatile earnings trend.
ACCO Brands Corporation (NYSE:ACCO)’s EPS is 1.03. Last year, their EPS growth was 7.40% while their EPS growth over the past five years is 9.00%. Analysts are predicting ACCO Brands Corporation’s stock to grow 12.89% over the next year and 10.00% over the next five.
As the next earnings season comes into focus, investors will be keeping watch on the performance of companies that they own. A company that continually exceeds earnings projections is most likely on the right track. On the other end of the spectrum, a company that frequently misses earnings projections might provide some insight to the fact that something isn’t right. Although it is important to keep track of earnings estimates and results, it shouldn’t be the only thing that the investor is looking at regarding the stock. Just because a company misses or beats expectations for one quarter may not mean anything super special. Tracking performance over a longer period of time can help paint the bigger picture of what is going on with the company. Sharp investors often have the ability to look deeper into the numbers to see the actual causes of an earnings hit or miss. Of course estimates are just that, estimates, and some analysts may be more accurate than others.