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This 1 Consumer Discretionary Stock Could Beat Earnings: Why It Should Be on Your Radar
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Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
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.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete 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 #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 Mattel?
The final step today is to look at a stock that meets our ESP qualifications. Mattel (MAT - Free Report) earns a #3 (Hold) zero days from its next quarterly earnings release on July 21, 2022, and its Most Accurate Estimate comes in at $0.08 a share.
MAT has an Earnings ESP figure of +44.23%, which, as explained above, is calculated by taking the percentage difference between the $0.08 Most Accurate Estimate and the Zacks Consensus Estimate of $0.05. Mattel is one of just a large database of stocks with positive ESPs. These stocks can be filtered by ESP, Zacks Rank, % Surprise (Last Qtr.), and Reporting date.
MAT is just one of a large group of Consumer Discretionary stocks with a positive ESP figure. Under Armour (UAA - Free Report) is another qualifying stock you may want to consider.
Under Armour, which is readying to report earnings on August 2, 2022, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.04 a share, and UAA is 12 days out from its next earnings report.
Under Armour's Earnings ESP figure currently stands at +18.92% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.03.
MAT and UAA's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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This 1 Consumer Discretionary Stock Could Beat Earnings: Why It Should Be on Your Radar
Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
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.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete 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 #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 Mattel?
The final step today is to look at a stock that meets our ESP qualifications. Mattel (MAT - Free Report) earns a #3 (Hold) zero days from its next quarterly earnings release on July 21, 2022, and its Most Accurate Estimate comes in at $0.08 a share.
MAT has an Earnings ESP figure of +44.23%, which, as explained above, is calculated by taking the percentage difference between the $0.08 Most Accurate Estimate and the Zacks Consensus Estimate of $0.05. Mattel is one of just a large database of stocks with positive ESPs. These stocks can be filtered by ESP, Zacks Rank, % Surprise (Last Qtr.), and Reporting date.
MAT is just one of a large group of Consumer Discretionary stocks with a positive ESP figure. Under Armour (UAA - Free Report) is another qualifying stock you may want to consider.
Under Armour, which is readying to report earnings on August 2, 2022, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.04 a share, and UAA is 12 days out from its next earnings report.
Under Armour's Earnings ESP figure currently stands at +18.92% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.03.
MAT and UAA's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 >>