Using data from Stockopedia, Shares has searched for the companies with the best earnings upgrades for this year and next over the last month.

We also noted their performance over the same period to see how much the upgrades had lifted the share prices, and the evidence is clear: all else being equal, upgrades tend to lead to outperformance.

Top of this month’s list is ‘challenger’ gas, electricity and water supplier Yu Group (YU.:AIM), which issued a trading update in November 2022 citing ‘an exceptional trading performance’ during the last couple of months meaning revenues and cash flow would ‘significantly’ exceed market expectations.

Prior to the update, earnings per share were seen just below zero for this year and next year, hence a small increase in absolute terms has become a huge increase in percentage terms.

In the case of mainstream energy supplier Centrica (CNA), the earnings upgrades are much less dramatic which is reflected in its more modest share price performance.

However, if we dig into the data we can see that the upgrade cycle in Centrica started all the way back in May when 2022 earnings per share forecasts were hiked from 7.3p to 9.3p. Since May, the consensus has been rising steadily and full-year earnings are now seen at 20.7p per share or almost three times the level forecast in April.

Retailer Card Factory (CARD) surprised the market with its latest trading update where it upped its forecasts for full-year EBITDA (earnings before interest, tax, depreciation and amortisation) and pre-tax earnings due to stronger-than-expected second half trading.

The news clearly caught the market offside as the shares, which had been languishing close to multi-year lows, have jumped more than 50% in the last month.

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