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How to Find Strong Basic Materials Stocks Slated for Positive Earnings Surprises
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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 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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 LyondellBasell?
The final step today is to look at a stock that meets our ESP qualifications. LyondellBasell (LYB - Free Report) earns a #3 (Hold) 11 days from its next quarterly earnings release on February 2, 2024, and its Most Accurate Estimate comes in at $1.38 a share.
LYB has an Earnings ESP figure of +2.86%, which, as explained above, is calculated by taking the percentage difference between the $1.38 Most Accurate Estimate and the Zacks Consensus Estimate of $1.34. LyondellBasell 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.
LYB is part of a big group of Basic Materials stocks that boast a positive ESP, and investors may want to take a look at Carpenter Technology (CRS - Free Report) as well.
Slated to report earnings on January 25, 2024, Carpenter Technology holds a #1 (Strong Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.86 a share three days from its next quarterly update.
For Carpenter Technology, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.85 is +0.89%.
Because both stocks hold a positive Earnings ESP, LYB and CRS 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 Basic Materials Stocks Slated for Positive Earnings Surprises
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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 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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 LyondellBasell?
The final step today is to look at a stock that meets our ESP qualifications. LyondellBasell (LYB - Free Report) earns a #3 (Hold) 11 days from its next quarterly earnings release on February 2, 2024, and its Most Accurate Estimate comes in at $1.38 a share.
LYB has an Earnings ESP figure of +2.86%, which, as explained above, is calculated by taking the percentage difference between the $1.38 Most Accurate Estimate and the Zacks Consensus Estimate of $1.34. LyondellBasell 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.
LYB is part of a big group of Basic Materials stocks that boast a positive ESP, and investors may want to take a look at Carpenter Technology (CRS - Free Report) as well.
Slated to report earnings on January 25, 2024, Carpenter Technology holds a #1 (Strong Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.86 a share three days from its next quarterly update.
For Carpenter Technology, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.85 is +0.89%.
Because both stocks hold a positive Earnings ESP, LYB and CRS 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 >>