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How to Boost Your Portfolio with Top Medical Stocks Set to Beat Earnings
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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 Cardinal Health?
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. Cardinal Health (CAH - Free Report) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $1.20 a share, just seven days from its upcoming earnings release on February 2, 2023.
By taking the percentage difference between the $1.20 Most Accurate Estimate and the $1.13 Zacks Consensus Estimate, Cardinal Health has an Earnings ESP of +5.75%. Investors should also know that CAH 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.
CAH is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Editas Medicine (EDIT - Free Report) as well.
Editas Medicine, which is readying to report earnings on February 23, 2023, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently -$0.76 a share, and EDIT is 28 days out from its next earnings report.
Editas Medicine's Earnings ESP figure currently stands at +5.47% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.80.
CAH and EDIT'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
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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 Cardinal Health?
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. Cardinal Health (CAH - Free Report) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $1.20 a share, just seven days from its upcoming earnings release on February 2, 2023.
By taking the percentage difference between the $1.20 Most Accurate Estimate and the $1.13 Zacks Consensus Estimate, Cardinal Health has an Earnings ESP of +5.75%. Investors should also know that CAH 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.
CAH is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Editas Medicine (EDIT - Free Report) as well.
Editas Medicine, which is readying to report earnings on February 23, 2023, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently -$0.76 a share, and EDIT is 28 days out from its next earnings report.
Editas Medicine's Earnings ESP figure currently stands at +5.47% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.80.
CAH and EDIT'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 >>