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Here's How Investors Can Find Strong Business Services Stocks with the Zacks ESP Screener
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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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, 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.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Gartner?
The final step today is to look at a stock that meets our ESP qualifications. Gartner (IT - Free Report) earns a #1 (Strong Buy) 19 days from its next quarterly earnings release on November 1, 2022, and its Most Accurate Estimate comes in at $1.90 a share.
By taking the percentage difference between the $1.90 Most Accurate Estimate and the $1.86 Zacks Consensus Estimate, Gartner has an Earnings ESP of +2.15%. Investors should also know that IT is one of a large group of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
IT is just one of a large group of Business Services stocks with a positive ESP figure. Spotify (SPOT - Free Report) is another qualifying stock you may want to consider.
Spotify, which is readying to report earnings on October 25, 2022, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently -$0.68 a share, and SPOT is 12 days out from its next earnings report.
The Zacks Consensus Estimate for Spotify is -$0.83, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +18.2%.
Because both stocks hold a positive Earnings ESP, IT and SPOT 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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Here's How Investors Can Find Strong Business Services Stocks with the Zacks ESP Screener
Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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, 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.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Gartner?
The final step today is to look at a stock that meets our ESP qualifications. Gartner (IT - Free Report) earns a #1 (Strong Buy) 19 days from its next quarterly earnings release on November 1, 2022, and its Most Accurate Estimate comes in at $1.90 a share.
By taking the percentage difference between the $1.90 Most Accurate Estimate and the $1.86 Zacks Consensus Estimate, Gartner has an Earnings ESP of +2.15%. Investors should also know that IT is one of a large group of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
IT is just one of a large group of Business Services stocks with a positive ESP figure. Spotify (SPOT - Free Report) is another qualifying stock you may want to consider.
Spotify, which is readying to report earnings on October 25, 2022, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently -$0.68 a share, and SPOT is 12 days out from its next earnings report.
The Zacks Consensus Estimate for Spotify is -$0.83, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +18.2%.
Because both stocks hold a positive Earnings ESP, IT and SPOT 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 >>