Back to top

Image: Bigstock

Should You Buy Yahoo! Ahead of Earnings?

Read MoreHide Full Article

Investors are always looking for stocks that are poised to beat at earnings season and Yahoo! Inc. may be one such company. The firm has earnings coming up pretty soon, and events are shaping up quite nicely for their report.

That is because Yahoo! is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. After all, analysts raising estimates right before earnings—with the most up-to-date information possible—is a pretty good indicator of some favorable trends underneath the surface for YHOO in this report.

In fact, the Most Accurate Estimate for the current quarter is currently at 15 cents per share for YHOO, compared to a broader Zacks Consensus Estimate of 14 cents per share. This suggests that analysts have very recently bumped up their estimates for YHOO, giving the stock a Zacks Earnings ESP of 7.14% heading into earnings season.

Yahoo Inc. Price and EPS Surprise

Yahoo Inc. Price and EPS Surprise | Yahoo Inc. Quote

Why is this Important?

A positive reading for the Zacks Earnings ESP has proven to be very powerful in producing both positive surprises, and outperforming the market. Our recent 10 year backtest shows that stocks that have a positive Earnings ESP and a Zacks Rank #3 (Hold) or better show a positive surprise nearly 70% of the time, and have returned over 28% on average in annual returns (see more Top Earnings ESP stocks here).

Given that YHOO has a Zacks Rank #3 (Hold) and an ESP in positive territory, investors might want to consider this stock ahead of earnings. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Clearly, recent earnings estimate revisions suggest that good things are ahead for Yahoo!, and that a beat might be in the cards for the upcoming report.

The Best Place to Start Your Stock Search

Today, you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>

Published in