Zacks.com Featured Expert Kevin Matras Highlights: Delphi Financial Group, Integrated Circuit Systems, Covance and UnitedHealth Group

Business Wire, August 3, 2005

CHICAGO -- Kevin Matras goes over two Screening Strategies that go beyond your ordinary Earnings screens. Stocks in this week's article are: Delphi Financial Group, Inc. (NYSE:DFG), Integrated Circuit Systems, Inc. (NASDAQ:ICST), Covance, Inc. (NYSE:CVD) and UnitedHealth Group, Inc. (NYSE:UNH). Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=109

Screen of the Week written by Kevin Matras of Zacks Investment Research:

In good markets or bad, strong earnings are one of the most important things that influence stock prices. But instead of just looking at the most recent quarter's earnings, try looking for earnings acceleration too. Studies have shown that almost all of the most successful stocks in the past displayed accelerated earnings BEFORE their most impressive price moves.

Sideways 'percentage earnings growth' (even if they're good) or decelerating 'percentage earnings growth' (strong or not) can potentially signal a period of consolidation (or slowdown) which in turn can flatten out prices or send them lower. But increasing 'percentage earnings growth' (consistently improving from the company's prior percentage of earnings growth) can often be the difference between good stocks and great stocks.

The Parameters

In this screen, Kevin Matras is focusing on increasing 'percentage earnings growth' and projected 'percentage earnings growth'. He wants each of the last two Quarter over Quarter % EPS Growth periods to be greater than the previous periods and the next two projected Quarter over Quarter % EPS Growth periods to be greater than the previous periods as well. (In addition to that, he is only including stocks greater than or equal to $5 with daily share volume of 100,000 or more.)

So the parameters would look like this;

--% Change Actual EPS Q(0)/Q(-1) greater than % Change Actual EPS Q(-1)/Q(-2)

--% Change Actual EPS Q(-1)/Q(-2) greater than % Change Actual EPS Q(-2)/Q(-3)

--Estimated EPS Growth Q(1)/Q(0) greater than % Change Actual EPS Q(0)/Q(-1)

--Estimated EPS Growth Q(2)/Q(1) greater than Estimated EPS Growth Q(1)/Q(0)

--Price greater than or equal to $5

--Average Daily Volume greater than or equal to 100,000

Here are two stocks from that list:

DFG   Delphi Financial Group, Inc.
    ICST  Integrated Circuit Systems, Inc.

This screen is available in the Research Wizard by going to:

'Screen' on your Menu Bar
    'Open Screen Definition'
    Double-clicking the 'SoW' folder
    Selecting the file: sow_earnings_acceleration

More on Earnings

Another screen Kevin likes running in regard to earnings, deals with Increasing Earnings (if not necessarily the % of EPS Growth).

Parameters

In this one he is looking for each of last eight quarters of Earnings (that's right -- eight quarters) to be greater than the previous quarter's Earnings.

So the parameters would look like this;

--Quarterly EPS Q(0) greater than Quarterly EPS Q(-1)

--Quarterly EPS Q(-1) greater than Quarterly EPS Q(-2)

--Quarterly EPS Q(-2) greater than Quarterly EPS Q(-3)

--Quarterly EPS Q(-3) greater than Quarterly EPS Q(-4)

--Quarterly EPS Q(-4) greater than Quarterly EPS Q(-5)

--Quarterly EPS Q(-5) greater than Quarterly EPS Q(-6)

--Quarterly EPS Q(-6) greater than Quarterly EPS Q(-7)

--Quarterly EPS Q(-7) greater than Quarterly EPS Q(-8)

This one isn't so much concerned with the increasing percentage of earnings growth, but rather, the simple increase of earnings from one period to another. The thing that makes this screen so tough (i.e., a great stock picker) is that it demands a consistency of excellent performance from a company over an 'extended' period of time.

Kevin also wants this quarter's Estimate Earnings to be greater than last quarter's Actual Earnings and the next quarter's Estimated Earnings to be greater than this quarter's Estimated Earnings.

--Q(1) Consensus Estimate greater than Q(0) Actual Quarterly EPS

--Q(2) Consensus Estimate greater than Q(1) Consensus Estimate

And

--Price greater than or equal to $5

--Average Daily Volume greater than or equal to 100,000

This strategy will typically find stocks with fantastic earnings consistency and a history of beating earnings expectations.

Here are two stocks from this list:

CVD   Covance, Inc.
    UNH   UnitedHealth Group, Inc.

This screen is also available in the Research Wizard. Go to;

'Screen' on your Menu Bar
    'Open Screen Definition'
    Double-click the 'SoW' folder
    Select the file: sow_increasing_earnings

All the Screen of the Week strategies are created and back-tested using the Research Wizard software from Zacks Investment Research. Learn more about the Research Wizard free trial offer and our new special report "Top 10 Stock Screening Strategies" at http://at.zacks.com/?id=111

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.