Harnessing the Power of Earnings Estimate Revisions

Earnings estimate revisions are the most powerful force impacting stock prices. Stocks with rising earnings estimates, as a group, have materially outperformed the S&P 500 year-after-year. Similarly, stocks with falling earnings estimates have underperformed the S&P 500 year-after-year.

Zacks has made the process of identifying stocks with changing earnings estimates easy and very profitable. Since 1988, a portfolio constructed of Zacks #1 Rank stocks has generated an average annual return of 28%. Even during the 2000-2002 bear market, the strategy generated positive returns.

This short guide explains how earnings estimates are created and, more importantly, how investors can use revisions in earnings estimates to invest more profitably.

"I can honestly say that I have never felt as confident in my trading, nor have I been as profitable, as I have by using Zacks."
Kurt Petrich
Norfalk, VA

Table of Contents
Zacks and the Zacks Rank
Who Are Institutional Investors?
Where Do Earnings Estimates Come From?
Consensus Estimates
The Zacks Rank
The Four Factors behind the Zacks Rank
Zacks Rank Performance
How the Zacks Rank Predicts Price Movement
Price Spikes and the Zacks Rank
Why a Stock May Lose Its #1 Rank
Integrating the Zacks Rank into Investment Strategies
The Difference Between ABR and The Zacks Rank
Limitations of the Zacks Rank
Where to View the Zacks Rank
Additional Resources from Zacks

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