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How to Boost Your Portfolio with Top Retail and Wholesale Stocks Set to Beat Earnings
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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.
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.
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 #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 Costco?
The final step today is to look at a stock that meets our ESP qualifications. Costco (COST - Free Report) earns a #3 (Hold) two days from its next quarterly earnings release on December 8, 2022, and its Most Accurate Estimate comes in at $3.16 a share.
Costco's Earnings ESP sits at +0.63%, which, as explained above, is calculated by taking the percentage difference between the $3.16 Most Accurate Estimate and the Zacks Consensus Estimate of $3.14. COST 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.
COST is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Five Below (FIVE - Free Report) .
Slated to report earnings on March 29, 2023, Five Below holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $3.05 a share 113 days from its next quarterly update.
The Zacks Consensus Estimate for Five Below is $2.99, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.91%.
Because both stocks hold a positive Earnings ESP, COST and FIVE 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
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.
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.
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 #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 Costco?
The final step today is to look at a stock that meets our ESP qualifications. Costco (COST - Free Report) earns a #3 (Hold) two days from its next quarterly earnings release on December 8, 2022, and its Most Accurate Estimate comes in at $3.16 a share.
Costco's Earnings ESP sits at +0.63%, which, as explained above, is calculated by taking the percentage difference between the $3.16 Most Accurate Estimate and the Zacks Consensus Estimate of $3.14. COST 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.
COST is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Five Below (FIVE - Free Report) .
Slated to report earnings on March 29, 2023, Five Below holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $3.05 a share 113 days from its next quarterly update.
The Zacks Consensus Estimate for Five Below is $2.99, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.91%.
Because both stocks hold a positive Earnings ESP, COST and FIVE 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 >>