Back to top

Weekend Wisdom

"At the end of the day, all stock price movements can be traced back to earnings."

Read that last line again...so it sticks!

The reason it's true is because when investors buy shares in a stock they are actually buying part ownership in that company. And owners of companies, big and small, are most concerned with the earnings they will generate in the years to come.

With earnings being of such central importance is why earnings season is such a critical time for investors. If the companies you own have good news, then their stocks will immediately jump higher. Yes, even in the midst of a bear rally. Unfortunately, if your companies disappoint, they will gap down HARD and you will be handed stiff losses.

Not surprisingly, investors have long sought a reliable "whisper number" they could use before companies report earnings. Truly, this would be the Holy Grail of investing. With that information in hand, an investor would have a portfolio that lights up like a Christmas Tree every earnings season.

Our research team has spent many long years in the hunt for this coveted whisper number and it is with great pleasure that I can say: WE FOUND IT!!!

Below I will detail what we discovered and, better yet, how you can profit from these whispers this earnings season...and every earnings season thereafter.

More . . .

--------------------------------------------------------------------------------------------------------------------

Earnings "Whisper" Access Closes Saturday

Now a research breakthrough can tip you off to positive earnings surprises BEFORE they're reported – with previously unthinkable accuracy. Today, it is open so that Zacks members can take full advantage of earnings season with pinpoint buys and sells.

Selected whispers from this research have proven to have a powerful impact on stock portfolios. Demand for this service is running sky high and thus must close to new members Saturday, January 5th at midnight.

Get details now >>

--------------------------------------------------------------------------------------------------------------------


Pushing Ahead When All Others Have Failed

Nobody understands earnings data more than Len Zacks. Remember he is the one who uncovered the power of earnings estimate revisions that is the cornerstone of the Zacks Rank for stocks and its +26% annual returns.

So I met with him over four years ago to start this project to find a reliable earnings whisper number. He told me not to waste my time.

Why? He cited numerous such projects undertaken by other leading researchers over the years. Each time they tried and failed.

In fact he shared with me his previous efforts that also ended in futility. He said emphatically, "Steve, I can tell you with 70% accuracy which stocks are more likely to beat estimates. But beating estimates and the share price moving higher are two very different things."

Certainly you know what he's saying. How many times have you owned a stock that supposedly beat estimates and yet the price went down afterwards? (Too many times is the answer...we've all been there).

I pleaded with him to try once again. He begrudgingly accepted the challenge with the help of others here at Zacks, like Kevin Matras, who have developed many of our most profitable trading strategies.

There was very little success early on. None of the new theories were panning out. Yet the toughest part was to get sufficient new data points in place to test. When this new class of earnings data was finally installed, then things got real interesting.


The Discovery of These "Whispers"

What finally got us on the right track was going back to the basics of the earnings estimate philosophy at the heart of the Zacks Rank. Here are the clues:

  • Earnings estimates come from brokerage firm stock analysts.

  • These analysts are highly motivated to create conservative estimates that can easily be beat. Why? If they have a Buy rating on a stock, and the estimates are too high, then the stock is more likely to disappoint. This would send the stock price lower and the performance on their stock ratings would be poor (leading to lower compensation).

  • The closer to earnings season we get, the more accurate the information that goes into the estimate.

Add it all up and there is no good reason for an analyst to create a higher estimate close to the date of the earnings report unless they had a DARN GOOD REASON. Focusing in on those estimates closest to the earnings announcement is where we found the "whisper that becomes a scream"...a clear indication from the analyst community about specific stocks more likely to beat earnings by a wide margin. And most importantly, rise on that news.


Where to Find These Stocks

We can't share all the details of the secret formula with you, but the new system relies on two under-utilized signals coming from the brokerage analyst community. These two whispers are then layered on top of other time-tested elements such as the Zacks Rank and Zacks Industry Rank to find only the best stocks in the best industries to profit from each earnings season.

If you would like to receive our precise whisper trading signals in the future, then we invite you to join one of our most in-demand services. But a word of caution: To make it easier for our members to profit, we cannot share this Whisper Trader strategy with too many investors. Access will close Saturday, January 5. So don’t wait to get details . . .

Learn more about the Zacks Whisper Trader

Wishing you great financial success,

Steve

Steve Reitmeister has been with Zacks since 1999 and currently serves as the Executive Vice President in charge of Zacks.com and all of its leading products for individual investors. After many long years, he is extremely proud to share with you our historic earnings prediction breakthrough, the Zacks Whisper Trader.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.00 +3.09%
SANCHEZ ENE… SN 34.18 +2.67%
PANTRY INC PTRY 21.02 +2.09%
INTEL CORP INTC 35.15 +1.88%
PIPER JAFFR… PJC 54.54 +1.70%