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How to Find Strong Medical Stocks Slated for Positive Earnings Surprises
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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.
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 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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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 Syndax Pharmaceuticals?
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. Syndax Pharmaceuticals (SNDX - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at -$0.61 a share, just 27 days from its upcoming earnings release on March 7, 2023.
By taking the percentage difference between the -$0.61 Most Accurate Estimate and the -$0.64 Zacks Consensus Estimate, Syndax Pharmaceuticals has an Earnings ESP of +4.39%. Investors should also know that SNDX 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.
SNDX is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Idexx Laboratories (IDXX - Free Report) as well.
Idexx Laboratories is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on May 3, 2023. IDXX's Most Accurate Estimate sits at $2.40 a share 84 days from its next earnings release.
The Zacks Consensus Estimate for Idexx Laboratories is $2.38, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.66%.
Because both stocks hold a positive Earnings ESP, SNDX and IDXX 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 Find Strong Medical Stocks Slated for Positive Earnings Surprises
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.
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 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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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 Syndax Pharmaceuticals?
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. Syndax Pharmaceuticals (SNDX - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at -$0.61 a share, just 27 days from its upcoming earnings release on March 7, 2023.
By taking the percentage difference between the -$0.61 Most Accurate Estimate and the -$0.64 Zacks Consensus Estimate, Syndax Pharmaceuticals has an Earnings ESP of +4.39%. Investors should also know that SNDX 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.
SNDX is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Idexx Laboratories (IDXX - Free Report) as well.
Idexx Laboratories is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on May 3, 2023. IDXX's Most Accurate Estimate sits at $2.40 a share 84 days from its next earnings release.
The Zacks Consensus Estimate for Idexx Laboratories is $2.38, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.66%.
Because both stocks hold a positive Earnings ESP, SNDX and IDXX 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 >>