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Table of Contents

The Zacks Rank:

Harnessing the Power of Earnings Estimate Revisions

Earnings estimate revisions are the most powerful force impacting stock prices. Stocks with rising earnings estimates, as a group, have materially outperformed the S&P 500 year-after-year. Similarly, stocks with falling earnings estimates have underperformed the S&P 500 year-after-year.

Zacks has made the process of identifying stocks with changing earnings estimates easy and very profitable. Since 1988, a portfolio constructed of Zacks #1 Rank stocks has generated an average annual return of 26%. Even during the 2000-2002 bear market, the strategy generated positive returns.

This short guide explains how earnings estimates are created and, more importantly, how investors can use revisions in earnings estimates to invest more profitably.1

"I can honestly say that I have never felt as confident in my trading, nor have I been as profitable, as I have by using Zacks."
Kurt Petrich
Norfalk, VA

(A version of this guide formatted for printing is also available.)

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