Zacks and the Zacks Rank
Zacks Investment Research was formed in 1978 to compile and analyze brokerage research for both institutional and individual investors. The guiding principle behind our work is the belief that there must be a good reason for the brokerage firms to spend over a billion dollars a year to research stocks to recommend to their clients. Obviously, these investment experts know something special that may be indicative of the future direction of stock prices. We were determined to unlock that secret knowledge and make it available to our clients to help them improve their investment results.
This massive undertaking requires us to continually process reports issued by approximately 3,000 analysts from 150 brokerage firms. At any given point in time, we are monitoring well over 200,000 earnings estimates and brokerage recommendation data points, looking for any change - whether it be a an upgrade from a "hold" to a "buy" or a revision in an analyst's forecast for a specific quarter or fiscal year. We constantly compile and update this information, distributing it to institutional investors and most of the leading financial web sites - including Zacks.com. Our ability to gather, analyze, and distribute information on a timely basis makes Zacks' research amongst the most widely used investment research on the web.
Creation of the Zacks Rank
In the 1970s, Len Zacks worked as the head of quantitative research for a major brokerage firm. Holding a PhD from MIT, Len created models designed to help investors beat the market.
After extensive research and testing, Len discovered that:
Earnings estimate revisions are the most powerful force impacting stock prices
This led to a groundbreaking article, published in the Financial Analysts Journal in 1979 and entitled "EPS Forecasts - Accuracy Is Not Enough." From this seminal work was born Zacks Investment research and the Zacks Rank.
The Zacks Rank is a quantitative model that uses four factors related to earnings estimates to classify stocks into five groups, ranging from "Strong Buy" to "Strong Sell". More importantly, it allows individual investors to take advantage of trends in Earnings Estimate Revisions and benefit from the power of institutional investors.
"I have bought many stocks over the past three years based on Zacks Rank and made money. Too many to mention names." Lowell Womack
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Zacks Rank Guide Table of Contents
(A version of this guide formatted for printing is also available.)