ScreenShot: Flowserve and IBM Get My Drift

Recently, I ran a screen through Zacks Elite for companies that have increasing earnings drift for estimates from analysts. As companies get closer to their earnings release, analysts will often start to drift their earnings estimates higher or lower depending on whether or not they feel a certain company's earnings are going to be better than expected. I also wanted the screen to produce fundamentally strong companies that rated above three on Zacks ranking system.

Analysts are an interesting group because they tend to move in a herd mentality. Nobody wants to be too far in front of everyone else. That's because if they're wrong, they are going to stick out like a sore thumb in front of their peers and employers. As a result, when one analyst's estimate starts to drift up or down, others follow, and this drift that can often give you a heads up on whether a company is going to miss or blow away earnings in the upcoming quarter.

I found two interesting situations in the screen I ran. IBM (IBM - commentary - Cramer's Take) is an old tech favorite that has redesigned itself from a hardware company to a leading software supplier. Flowserve (FLS - commentary - Cramer's Take) is an interesting play on the strength of the oil industry because they provide top-of-the-line valves for major producers and drilling companies.

Estimate-Screen

Click here for larger image.

Source: Zacks Elite

Flowserve

Flowserve is a manufacturer of heavy-duty industrial pumps, valves and seals. The company has three divisions: Flowserve Pump, Flow Control and Flow Solutions. Their worldwide operations are spread throughout 53 countries, with 43% of its revenue coming from North America.

Their highly specialized products are generally used in heavy industries, such as oil drilling and water and chemical processing. With the boom in the oil sector, Flowserve now gets about 41% of its orders from the oil and gas industry.

---

At time of publication, Manning had no positions in the stocks mentioned, although holdings can change at any time.

Mark Manning, AAMS, is an Accredited Asset Management Specialist and Registered Investment Advisor with Butler, Wick & Co., where he specializes in wealth management. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Manning appreciates your feedback; click here to send him an email.