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How to Find Strong Oils and Energy Stocks Slated for Positive Earnings Surprises
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Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
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.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% annual returns on average, according to our 10 year backtest.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, 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 Exxon Mobil?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Exxon Mobil (XOM - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.67 a share, just two days from its upcoming earnings release on April 28, 2023.
By taking the percentage difference between the $2.67 Most Accurate Estimate and the $2.65 Zacks Consensus Estimate, Exxon Mobil has an Earnings ESP of +0.55%. Investors should also know that XOM 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.
XOM is part of a big group of Oils and Energy stocks that boast a positive ESP, and investors may want to take a look at Enterprise Products Partners (EPD - Free Report) as well.
Enterprise Products Partners, which is readying to report earnings on May 2, 2023, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $0.62 a share, and EPD is six days out from its next earnings report.
Enterprise Products Partners' Earnings ESP figure currently stands at +1.09% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.61.
XOM and EPD's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 Oils and Energy Stocks Slated for Positive Earnings Surprises
Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
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.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% annual returns on average, according to our 10 year backtest.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, 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 Exxon Mobil?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Exxon Mobil (XOM - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.67 a share, just two days from its upcoming earnings release on April 28, 2023.
By taking the percentage difference between the $2.67 Most Accurate Estimate and the $2.65 Zacks Consensus Estimate, Exxon Mobil has an Earnings ESP of +0.55%. Investors should also know that XOM 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.
XOM is part of a big group of Oils and Energy stocks that boast a positive ESP, and investors may want to take a look at Enterprise Products Partners (EPD - Free Report) as well.
Enterprise Products Partners, which is readying to report earnings on May 2, 2023, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $0.62 a share, and EPD is six days out from its next earnings report.
Enterprise Products Partners' Earnings ESP figure currently stands at +1.09% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.61.
XOM and EPD's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 >>