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How to Boost Your Portfolio with Top Consumer Discretionary Stocks Set to Beat Earnings
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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.
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 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.
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.
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 Nike?
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. Nike (NKE - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.74 a share, just 15 days from its upcoming earnings release on March 21, 2024.
By taking the percentage difference between the $0.74 Most Accurate Estimate and the $0.70 Zacks Consensus Estimate, Nike has an Earnings ESP of +5.21%. Investors should also know that NKE 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.
NKE is part of a big group of Consumer Discretionary stocks that boast a positive ESP, and investors may want to take a look at Walt Disney (DIS - Free Report) as well.
Walt Disney is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 8, 2024. DIS' Most Accurate Estimate sits at $1.03 a share 63 days from its next earnings release.
For Walt Disney, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.03 is +0.36%.
Because both stocks hold a positive Earnings ESP, NKE and DIS 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 Consumer Discretionary Stocks Set to Beat Earnings
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.
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 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.
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.
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 Nike?
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. Nike (NKE - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.74 a share, just 15 days from its upcoming earnings release on March 21, 2024.
By taking the percentage difference between the $0.74 Most Accurate Estimate and the $0.70 Zacks Consensus Estimate, Nike has an Earnings ESP of +5.21%. Investors should also know that NKE 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.
NKE is part of a big group of Consumer Discretionary stocks that boast a positive ESP, and investors may want to take a look at Walt Disney (DIS - Free Report) as well.
Walt Disney is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 8, 2024. DIS' Most Accurate Estimate sits at $1.03 a share 63 days from its next earnings release.
For Walt Disney, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.03 is +0.36%.
Because both stocks hold a positive Earnings ESP, NKE and DIS 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 >>