Encore Wire set to beat analyst estimate

Big variance in the analyst estimates may bring BIG opportunity

Wall street analysts covering Encore Wire have been as much as 86% wrong this year and its not the only time this has happened.

Company Highlights

  • Market Capitalization: $1.13 billion
  • Current Price: $47.75
  • 52 Week Range: $33.40 - $52.65
  • Number of Analysts: 2
  • Analyst Estimate: $0.48 EPS
  • Business Cylce: Uptrend*
  • Company Website: Encore Wire

It seems quite surprising that a company with a market capitalization of over a billion dollars and trading since 1992, would only have 2 wall street analysts covering its earnings. There are a ton of small cap companies that have little to no coverage and we absolutely love those. It gives us the opportunity; to shed some light on a company in which the average investor may not be able to quantify what their revenue and earnings should be, in order to grow shareholder value.

Encore Wire presents us with a similar opportunity to capitalize on a special opportunity. This opportunity is not from having no analyst coverage, but one of very little coverage and which is often very wrong. Over the years, anaylst estimates have been far off the mark of the earnings per share estimate and its this variance that presents opoprtunity to capture gains from the mis-pricing. In this past year alone, analyst have been off by as much as 86%! This has caused huge upward price gaps on earnings day

Once we find opportunities like Encore, which over the years analyst have a consistincy of missing the target with enough room to surprise to the upside, we will attempt to build a better mousetrap to model its earnings more accurately. Although surprises may come in many forms and there are certainly no gaurantees, we have built a model that seems to be substantially more efficient

In the spirit of full disclosure, we have built this model quite a while ago and have made regular investments over the years, as we believe it still performs amazingly well. With the launch of our website, we will begin sharing our outlook on Encore Wire earnings and will alert our subscribers when there is another huge variance in the works

So what is our outlook? We believe that the business is comfortably within its uptrend and our Revenue Estimate is $302.52 million and $0.72 EPS. Time will tell whether our model will continue to hit the numbers, but with earnings annoucement a week away, you won't have to wait long. With the current variance between wall street estimate at $0.48 and our $0.72, that is a 50% potential surprise!

* Uptrend and Business Cylce is a product of QUANTeFied.com comprised of 165 metrics and study of over 10 years of financial history and should not be construed as investment advice

Company Description

Encore Wire Corporation manufactures and sells electrical building wire and cable products for interior electrical wiring in the United States. Its products include NM-B cable for use as interior wiring in homes, apartments, and manufactured housing; THHN/THWN-2, metal-clad, and armored cables for use primarily as wiring in commercial and industrial buildings; UF-B cables; XHHW-2 cables; RHH/RHW-2 cables; and other types of wire products. The company markets its products primarily through independent manufacturers' representatives to wholesale electrical distributors. Encore Wire Corporation was founded in 1989 and is headquartered in McKinney, Texas.

Tagged in :