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.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
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.
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.
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 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 Hologic?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Hologic earns a #2 (Buy) right now and its Most Accurate Estimate sits at $0.91 a share, just 14 days from its upcoming earnings release on February 1, 2023.
HOLX has an Earnings ESP figure of +3.13%, which, as explained above, is calculated by taking the percentage difference between the $0.91 Most Accurate Estimate and the Zacks Consensus Estimate of $0.88. Hologic 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.
HOLX is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Exact Sciences as well.
Exact Sciences is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on February 28, 2023. EXAS' Most Accurate Estimate sits at -$0.80 a share 41 days from its next earnings release.
Exact Sciences' Earnings ESP figure currently stands at +12.81% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.92.
Because both stocks hold a positive Earnings ESP, HOLX and EXAS 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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Want Better Returns? Don?t Ignore These 2 Medical 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.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
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.
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.
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 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 Hologic?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Hologic earns a #2 (Buy) right now and its Most Accurate Estimate sits at $0.91 a share, just 14 days from its upcoming earnings release on February 1, 2023.
HOLX has an Earnings ESP figure of +3.13%, which, as explained above, is calculated by taking the percentage difference between the $0.91 Most Accurate Estimate and the Zacks Consensus Estimate of $0.88. Hologic 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.
HOLX is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Exact Sciences as well.
Exact Sciences is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on February 28, 2023. EXAS' Most Accurate Estimate sits at -$0.80 a share 41 days from its next earnings release.
Exact Sciences' Earnings ESP figure currently stands at +12.81% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.92.
Because both stocks hold a positive Earnings ESP, HOLX and EXAS 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 >>