Erie Indemnity (ERIE) Lags Q2 Earnings Estimates – July 28, 2022


Erie Compensation (ERIE Free Report) came out with quarterly earnings of $1.53 per share, missing Zacks consensus estimate of $1.62 per share. That compares to earnings of $1.51 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a profit surprise of -5.56%. A quarter ago, this insurance company was expected to post a profit of $1.45 per share when it was actually making a profit of $1.31, delivering a surprise of -9, 66%.

Over the past four quarters, the company has been unable to exceed consensus EPS estimates.

Erie Indemnity, which is part of the Zacks Insurance – Brokerage segment, posted revenue of $726.14 million for the quarter ended June 2022, beating Zacks’ consensus estimate by 2.64%. That compares to revenues of $680.03 million a year ago. The company has exceeded consensus revenue estimates three times in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Erie Indemnity shares have gained about 0.9% year-to-date compared to the -15.6% decline in the S&P 500.

What’s next for Erie Indemnity?

Although Erie Indemnity has outperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but a reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this earnings release, the trend of estimate revisions for Erie Indemnity is mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a No. 3 (hold) Zacks ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.80 on $717.1 million in revenue for the upcoming quarter and $5.99 on $2.76 billion in revenue for the current fiscal year.

Investors should be aware that industry outlook can also have a significant impact on stock performance. In terms of Zacks industry rankings, insurance brokerage currently sits in the bottom 42% of over 250 Zacks industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

DiamondRock Hospitality (HRD Free Report), another stock in Zacks Finance’s broader sector, has yet to report results for the quarter ending June 2022. Results are expected to be released on August 3.

This hotel and resort real estate investment trust is expected to post quarterly earnings of $0.31 per share in its next report, representing a year-over-year change of +520%. The consensus EPS estimate for the quarter has been revised up 2.9% in the past 30 days from the current level.

DiamondRock Hospitality revenue is expected to be $259.03 million, up 107.6% from the prior year quarter.


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