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How Investors Can Grab Better Returns for Retail and Wholesale Using 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.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more 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.
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.
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 Dollar Tree?
The final step today is to look at a stock that meets our ESP qualifications. Dollar Tree (DLTR - Free Report) earns a #3 (Hold) one day from its next quarterly earnings release on November 22, 2022, and its Most Accurate Estimate comes in at $1.24 a share.
DLTR has an Earnings ESP figure of +6.31%, which, as explained above, is calculated by taking the percentage difference between the $1.24 Most Accurate Estimate and the Zacks Consensus Estimate of $1.17. Dollar Tree 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.
DLTR is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Kohl's (KSS - Free Report) is another qualifying stock you may want to consider.
Kohl's is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on March 7, 2023. KSS' Most Accurate Estimate sits at $1.14 a share 106 days from its next earnings release.
For Kohl's, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.11 is +3.07%.
Because both stocks hold a positive Earnings ESP, DLTR and KSS 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 Investors Can Grab Better Returns for Retail and Wholesale Using 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.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more 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.
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.
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 Dollar Tree?
The final step today is to look at a stock that meets our ESP qualifications. Dollar Tree (DLTR - Free Report) earns a #3 (Hold) one day from its next quarterly earnings release on November 22, 2022, and its Most Accurate Estimate comes in at $1.24 a share.
DLTR has an Earnings ESP figure of +6.31%, which, as explained above, is calculated by taking the percentage difference between the $1.24 Most Accurate Estimate and the Zacks Consensus Estimate of $1.17. Dollar Tree 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.
DLTR is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Kohl's (KSS - Free Report) is another qualifying stock you may want to consider.
Kohl's is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on March 7, 2023. KSS' Most Accurate Estimate sits at $1.14 a share 106 days from its next earnings release.
For Kohl's, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.11 is +3.07%.
Because both stocks hold a positive Earnings ESP, DLTR and KSS 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 >>