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How to Boost Your Portfolio with Top Transportation Stocks Set to Beat Earnings
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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.
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 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 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 Union Pacific?
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. Union Pacific (UNP - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.58 a share, just two days from its upcoming earnings release on January 25, 2024.
By taking the percentage difference between the $2.58 Most Accurate Estimate and the $2.56 Zacks Consensus Estimate, Union Pacific has an Earnings ESP of +0.79%. Investors should also know that UNP 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.
UNP is part of a big group of Transportation stocks that boast a positive ESP, and investors may want to take a look at United Airlines (UAL - Free Report) as well.
Slated to report earnings on April 16, 2024, United Airlines holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$0.01 a share 84 days from its next quarterly update.
United Airlines' Earnings ESP figure currently stands at +92.97% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.11.
Because both stocks hold a positive Earnings ESP, UNP and UAL 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 Boost Your Portfolio with Top Transportation Stocks Set to Beat Earnings
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.
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 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 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 Union Pacific?
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. Union Pacific (UNP - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.58 a share, just two days from its upcoming earnings release on January 25, 2024.
By taking the percentage difference between the $2.58 Most Accurate Estimate and the $2.56 Zacks Consensus Estimate, Union Pacific has an Earnings ESP of +0.79%. Investors should also know that UNP 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.
UNP is part of a big group of Transportation stocks that boast a positive ESP, and investors may want to take a look at United Airlines (UAL - Free Report) as well.
Slated to report earnings on April 16, 2024, United Airlines holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$0.01 a share 84 days from its next quarterly update.
United Airlines' Earnings ESP figure currently stands at +92.97% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.11.
Because both stocks hold a positive Earnings ESP, UNP and UAL 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 >>