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How to Boost Your Portfolio with Top Retail and Wholesale Stocks Set to Beat Earnings
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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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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 #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 Dollar General?
The final step today is to look at a stock that meets our ESP qualifications. Dollar General (DG - Free Report) earns a #3 (Hold) 28 days from its next quarterly earnings release on December 1, 2022, and its Most Accurate Estimate comes in at $2.60 a share.
Dollar General's Earnings ESP sits at +2.35%, which, as explained above, is calculated by taking the percentage difference between the $2.60 Most Accurate Estimate and the Zacks Consensus Estimate of $2.54. DG 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.
DG is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Foot Locker (FL - Free Report) is another qualifying stock you may want to consider.
Foot Locker, which is readying to report earnings on November 18, 2022, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $1.16 a share, and FL is 15 days out from its next earnings report.
For Foot Locker, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.10 is +5.42%.
Because both stocks hold a positive Earnings ESP, DG and FL 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 Retail and Wholesale Stocks Set to Beat Earnings
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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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 #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 Dollar General?
The final step today is to look at a stock that meets our ESP qualifications. Dollar General (DG - Free Report) earns a #3 (Hold) 28 days from its next quarterly earnings release on December 1, 2022, and its Most Accurate Estimate comes in at $2.60 a share.
Dollar General's Earnings ESP sits at +2.35%, which, as explained above, is calculated by taking the percentage difference between the $2.60 Most Accurate Estimate and the Zacks Consensus Estimate of $2.54. DG 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.
DG is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Foot Locker (FL - Free Report) is another qualifying stock you may want to consider.
Foot Locker, which is readying to report earnings on November 18, 2022, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $1.16 a share, and FL is 15 days out from its next earnings report.
For Foot Locker, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.10 is +5.42%.
Because both stocks hold a positive Earnings ESP, DG and FL 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 >>