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How to Boost Your Portfolio with Top Medical Stocks Set to Beat Earnings
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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.
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.
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.
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 Shockwave Medical?
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. Shockwave Medical (SWAV - Free Report) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $0.97 a share, just 24 days from its upcoming earnings release on February 16, 2023.
By taking the percentage difference between the $0.97 Most Accurate Estimate and the $0.95 Zacks Consensus Estimate, Shockwave Medical has an Earnings ESP of +2.11%. Investors should also know that SWAV is one of a large group 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.
SWAV is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is Merck (MRK - Free Report) .
Merck is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on February 2, 2023. MRK's Most Accurate Estimate sits at $1.57 a share 10 days from its next earnings release.
For Merck, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.55 is +1.2%.
SWAV and MRK's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 Medical Stocks Set to Beat Earnings
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.
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.
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.
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 Shockwave Medical?
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. Shockwave Medical (SWAV - Free Report) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $0.97 a share, just 24 days from its upcoming earnings release on February 16, 2023.
By taking the percentage difference between the $0.97 Most Accurate Estimate and the $0.95 Zacks Consensus Estimate, Shockwave Medical has an Earnings ESP of +2.11%. Investors should also know that SWAV is one of a large group 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.
SWAV is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is Merck (MRK - Free Report) .
Merck is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on February 2, 2023. MRK's Most Accurate Estimate sits at $1.57 a share 10 days from its next earnings release.
For Merck, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.55 is +1.2%.
SWAV and MRK's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 >>