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How to Find Strong Transportation Stocks Slated for Positive Earnings Surprises
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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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.
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.
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 #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 Alaska Air Group?
The final step today is to look at a stock that meets our ESP qualifications. Alaska Air Group (ALK - Free Report) earns a #3 (Hold) 30 days from its next quarterly earnings release on April 18, 2024, and its Most Accurate Estimate comes in at -$0.72 a share.
ALK has an Earnings ESP figure of +16.37%, which, as explained above, is calculated by taking the percentage difference between the -$0.72 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.86. Alaska Air Group 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.
ALK is just one of a large group of Transportation stocks with a positive ESP figure. CSX (CSX - Free Report) is another qualifying stock you may want to consider.
CSX, which is readying to report earnings on April 18, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.45 a share, and CSX is 30 days out from its next earnings report.
The Zacks Consensus Estimate for CSX is $0.45, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.64%.
Because both stocks hold a positive Earnings ESP, ALK and CSX 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 Transportation Stocks Slated for Positive Earnings Surprises
Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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.
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.
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 #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 Alaska Air Group?
The final step today is to look at a stock that meets our ESP qualifications. Alaska Air Group (ALK - Free Report) earns a #3 (Hold) 30 days from its next quarterly earnings release on April 18, 2024, and its Most Accurate Estimate comes in at -$0.72 a share.
ALK has an Earnings ESP figure of +16.37%, which, as explained above, is calculated by taking the percentage difference between the -$0.72 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.86. Alaska Air Group 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.
ALK is just one of a large group of Transportation stocks with a positive ESP figure. CSX (CSX - Free Report) is another qualifying stock you may want to consider.
CSX, which is readying to report earnings on April 18, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.45 a share, and CSX is 30 days out from its next earnings report.
The Zacks Consensus Estimate for CSX is $0.45, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.64%.
Because both stocks hold a positive Earnings ESP, ALK and CSX 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 >>