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How to Boost Your Portfolio with Top Industrial Products Stocks Set to Beat Earnings
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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.
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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Deere?
The final step today is to look at a stock that meets our ESP qualifications. Deere (DE - Free Report) earns a #3 (Hold) three days from its next quarterly earnings release on August 19, 2022, and its Most Accurate Estimate comes in at $6.74 a share.
Deere's Earnings ESP sits at +1.83%, which, as explained above, is calculated by taking the percentage difference between the $6.74 Most Accurate Estimate and the Zacks Consensus Estimate of $6.62. DE is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
DE is part of a big group of Industrial Products stocks that boast a positive ESP, and investors may want to take a look at Eaton (ETN - Free Report) as well.
Slated to report earnings on November 1, 2022, Eaton holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $2.02 a share 77 days from its next quarterly update.
The Zacks Consensus Estimate for Eaton is $2.01, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.1%.
Because both stocks hold a positive Earnings ESP, DE and ETN 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 Boost Your Portfolio with Top Industrial Products Stocks Set to Beat Earnings
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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.
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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Deere?
The final step today is to look at a stock that meets our ESP qualifications. Deere (DE - Free Report) earns a #3 (Hold) three days from its next quarterly earnings release on August 19, 2022, and its Most Accurate Estimate comes in at $6.74 a share.
Deere's Earnings ESP sits at +1.83%, which, as explained above, is calculated by taking the percentage difference between the $6.74 Most Accurate Estimate and the Zacks Consensus Estimate of $6.62. DE is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
DE is part of a big group of Industrial Products stocks that boast a positive ESP, and investors may want to take a look at Eaton (ETN - Free Report) as well.
Slated to report earnings on November 1, 2022, Eaton holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $2.02 a share 77 days from its next quarterly update.
The Zacks Consensus Estimate for Eaton is $2.01, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.1%.
Because both stocks hold a positive Earnings ESP, DE and ETN 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 >>