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Here's How Investors Can Find Strong Finance Stocks with the Zacks ESP Screener
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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
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.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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 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 Synchrony?
The final step today is to look at a stock that meets our ESP qualifications. Synchrony (SYF - Free Report) earns a #3 (Hold) six days from its next quarterly earnings release on October 25, 2022, and its Most Accurate Estimate comes in at $1.62 a share.
SYF has an Earnings ESP figure of +11.33%, which, as explained above, is calculated by taking the percentage difference between the $1.62 Most Accurate Estimate and the Zacks Consensus Estimate of $1.45. Synchrony is one of a large database 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.
SYF is just one of a large group of Finance stocks with a positive ESP figure. Public Storage (PSA - Free Report) is another qualifying stock you may want to consider.
Public Storage, which is readying to report earnings on November 1, 2022, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $4.10 a share, and PSA is 13 days out from its next earnings report.
For Public Storage, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $4.05 is +1.34%.
Because both stocks hold a positive Earnings ESP, SYF and PSA 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 Finance Stocks with the Zacks ESP Screener
Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
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.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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 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 Synchrony?
The final step today is to look at a stock that meets our ESP qualifications. Synchrony (SYF - Free Report) earns a #3 (Hold) six days from its next quarterly earnings release on October 25, 2022, and its Most Accurate Estimate comes in at $1.62 a share.
SYF has an Earnings ESP figure of +11.33%, which, as explained above, is calculated by taking the percentage difference between the $1.62 Most Accurate Estimate and the Zacks Consensus Estimate of $1.45. Synchrony is one of a large database 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.
SYF is just one of a large group of Finance stocks with a positive ESP figure. Public Storage (PSA - Free Report) is another qualifying stock you may want to consider.
Public Storage, which is readying to report earnings on November 1, 2022, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $4.10 a share, and PSA is 13 days out from its next earnings report.
For Public Storage, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $4.05 is +1.34%.
Because both stocks hold a positive Earnings ESP, SYF and PSA 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 >>