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Why Investors Need to Take Advantage of These 2 Industrial Products Stocks Now
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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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 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 Illinois Tool Works?
The final step today is to look at a stock that meets our ESP qualifications. Illinois Tool Works (ITW - Free Report) earns a #3 (Hold) 30 days from its next quarterly earnings release on February 1, 2024, and its Most Accurate Estimate comes in at $2.41 a share.
ITW has an Earnings ESP figure of +1.15%, which, as explained above, is calculated by taking the percentage difference between the $2.41 Most Accurate Estimate and the Zacks Consensus Estimate of $2.38. Illinois Tool Works is one of a large database 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.
ITW 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.
Slated to report earnings on January 30, 2024, Caterpillar holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $5.03 a share 28 days from its next quarterly update.
For Caterpillar, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $4.76 is +5.74%.
ITW and CAT's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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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Why Investors Need to Take Advantage of These 2 Industrial Products Stocks Now
Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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 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 Illinois Tool Works?
The final step today is to look at a stock that meets our ESP qualifications. Illinois Tool Works (ITW - Free Report) earns a #3 (Hold) 30 days from its next quarterly earnings release on February 1, 2024, and its Most Accurate Estimate comes in at $2.41 a share.
ITW has an Earnings ESP figure of +1.15%, which, as explained above, is calculated by taking the percentage difference between the $2.41 Most Accurate Estimate and the Zacks Consensus Estimate of $2.38. Illinois Tool Works is one of a large database 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.
ITW 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.
Slated to report earnings on January 30, 2024, Caterpillar holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $5.03 a share 28 days from its next quarterly update.
For Caterpillar, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $4.76 is +5.74%.
ITW and CAT's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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 >>