The Difference Between Zacks Rank and Zacks Rec.
Two Proven Tools You Can Use to Boost Your Portfolio.
Zacks Investment Research has created two proven stock-rating systems: the Zacks Rank and Zacks Recommendation. Each provides valuable insights into the future profitability of a stock and can be used separately or in combination with each other depending on your investment style. In this article, we will examine the differences between the Zacks Rank and Zacks Recommendation so you can determine how they can best help you achieve your financial goals.
ABOUT THE ZACKS RANK SHORT-TERM RATING
Since 1988, our proven Zacks Rank stock-rating system has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1988-2011 and were examined and attested by Baker Tilly, an independent accounting firm.
The Zacks Rank is purely mathematical. The rank is produced through a daily quantitative process that looks at four factors dealing with earnings estimate revisions and earnings surprises. The ratings are not determined by Wall Street or some agenda, but a powerful timeliness indicator proving effective in predicting stock price movements relative to the market over the next one to three months.
The Zacks Rank Classifies Stocks into Five Levels:
|Zacks Rank||Recommendation||*Annualized Return %|
*From Jan 1, 1988 through Mar 31, 2013
Performance information for other Zacks' portfolios and strategies is available at: http://www.zacks.com/performance
ABOUT ZACKS RECOMMENDATION LONG-TERM RATING
The Zacks Rank covers approximately 4,400 short-term stocks. However, we realize that not everyone is a short-term trader with a one-to-three month time frame. So we set out to create a model that's just as powerful as the Zacks Rank but better tailored to the buy-and-hold investor.
This led to the creation of Zacks Recommendation, our second quantitative model that gives you long-term guidance to stock picking. This stock-rating system is still rooted in earnings estimates and starts with the Zacks Rank, but there are three key differences that set Zacks Recommendation apart:
- It predicts stock price movement over a 6+ month time frame, perfect for long-term investing
- It is a 3-point scale: Outperform, Neutral, Underperform
- It combines the quantitative model with analyst insight
The last point is of particular interest. Zacks Recommendation goes beyond the quantitative stock-rating model. You also get insight and fresh recommendations from a team of stock analysts who follow industries, talk to company management and more for even better performance.
The Zacks Equity Research division consists of a team of analysts fully versed in the benefits of earnings estimate revisions and how they're harnessed through the Zacks Rank and Zacks Recommendations, the long-term quantitative model. Our analysts can override the quantitative recommendations for the 1,050 stocks they follow. These recommendations are also shared with Zacks Premium subscribers on the web site and featured in the detailed Analyst research reports as the Zacks Recommendation.
Here at Zacks, we override the quantitative model for two reasons:
1. There are often factors such as valuation, industry conditions and management effectiveness that a trained investment professional can spot better than a quantitative model.
2. Our analyst recommendations have overall outperformed the model in cases where they have overridden the quantitative recommendations. And unlike other Wall Street firms, we have a better balance between the number of Outperform and Neutral recommendations. See Zacks Recommendation Performance.
WHICH STOCK-RATING SYSTEM IS RIGHT FOR YOU?
To determine whether the Zacks Rank or Zacks Recommendation is right for you depends largely on your investment time horizon. If you are a short-term trader, then the Zacks Rank with its one-to-three month outlook is most appropriate. If you're a long-term investor, then best for you to turn to Zacks Recommendation that is meant for a 6+ month time frame. Or, you can search for stocks that are highly rated by both systems.
ZACKS RANK AND EQUITY RESEARCH RESOURCES
Zacks Rank Home: Here you will discover all the tools and resources that make the most of the Zacks Rank. Be sure to bookmark this page for future reference.
Zacks Equity Research Home: All the articles, recommendations and reports from Zacks Equity Research can be found here. Be sure to bookmark this page for future reference.
Quote Page: Zacks Premium members can get the Zacks Recommendation along with the Zacks Rank for stocks on the quote pages of Zacks.com.
Portfolio Tracker and Daily Email Updates: Zacks Premium members who track their portfolios on Zacks.com will get daily email updates that provide vital updates, including changes in the Zacks Rank and Zacks Recommendation, for all the stocks you're following. Learn more about the benefits of Zacks Premium membership.