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How to Find Strong Industrial Products Stocks Slated for Positive Earnings Surprises
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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), or the top 15% and top 5% of stocks, respectively, should outperform the market; Strong Buy stocks should outperform more than any other rank.
Should You Consider Agco?
The final step today is to look at a stock that meets our ESP qualifications. Agco (AGCO - Free Report) earns a #3 (Hold) 14 days from its next quarterly earnings release on May 2, 2023, and its Most Accurate Estimate comes in at $2.83 a share.
By taking the percentage difference between the $2.83 Most Accurate Estimate and the $2.67 Zacks Consensus Estimate, Agco has an Earnings ESP of +6.09%. Investors should also know that AGCO is one of a large group of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
AGCO is part of a big group of Industrial Products stocks that boast a positive ESP, and investors may want to take a look at Caterpillar (CAT - Free Report) as well.
Caterpillar is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 27, 2023. CAT's Most Accurate Estimate sits at $3.87 a share nine days from its next earnings release.
The Zacks Consensus Estimate for Caterpillar is $3.78, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +2.54%.
Because both stocks hold a positive Earnings ESP, AGCO and CAT could potentially post earnings beats in their next reports.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>
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How to Find Strong Industrial Products Stocks Slated for Positive Earnings Surprises
Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), or the top 15% and top 5% of stocks, respectively, should outperform the market; Strong Buy stocks should outperform more than any other rank.
Should You Consider Agco?
The final step today is to look at a stock that meets our ESP qualifications. Agco (AGCO - Free Report) earns a #3 (Hold) 14 days from its next quarterly earnings release on May 2, 2023, and its Most Accurate Estimate comes in at $2.83 a share.
By taking the percentage difference between the $2.83 Most Accurate Estimate and the $2.67 Zacks Consensus Estimate, Agco has an Earnings ESP of +6.09%. Investors should also know that AGCO is one of a large group of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
AGCO is part of a big group of Industrial Products stocks that boast a positive ESP, and investors may want to take a look at Caterpillar (CAT - Free Report) as well.
Caterpillar is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 27, 2023. CAT's Most Accurate Estimate sits at $3.87 a share nine days from its next earnings release.
The Zacks Consensus Estimate for Caterpillar is $3.78, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +2.54%.
Because both stocks hold a positive Earnings ESP, AGCO and CAT could potentially post earnings beats in their next reports.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>