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These 2 Consumer Discretionary Stocks Could Beat Earnings: Why They Should Be on Your Radar
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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.
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.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
The Zacks Earnings ESP, Explained
The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
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.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider International Game Technology?
The final step today is to look at a stock that meets our ESP qualifications. International Game Technology (IGT - Free Report) earns a #1 (Strong Buy) 19 days from its next quarterly earnings release on February 28, 2023, and its Most Accurate Estimate comes in at $0.33 a share.
International Game Technology's Earnings ESP sits at +16.07%, which, as explained above, is calculated by taking the percentage difference between the $0.33 Most Accurate Estimate and the Zacks Consensus Estimate of $0.28. IGT 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.
IGT is part of a big group of Consumer Discretionary stocks that boast a positive ESP, and investors may want to take a look at Roku (ROKU - Free Report) as well.
Slated to report earnings on February 15, 2023, Roku holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$1.70 a share six days from its next quarterly update.
Roku's Earnings ESP figure currently stands at +1.97% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$1.74.
Because both stocks hold a positive Earnings ESP, IGT and ROKU 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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These 2 Consumer Discretionary Stocks Could Beat Earnings: Why They Should Be on Your Radar
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.
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.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
The Zacks Earnings ESP, Explained
The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
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.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider International Game Technology?
The final step today is to look at a stock that meets our ESP qualifications. International Game Technology (IGT - Free Report) earns a #1 (Strong Buy) 19 days from its next quarterly earnings release on February 28, 2023, and its Most Accurate Estimate comes in at $0.33 a share.
International Game Technology's Earnings ESP sits at +16.07%, which, as explained above, is calculated by taking the percentage difference between the $0.33 Most Accurate Estimate and the Zacks Consensus Estimate of $0.28. IGT 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.
IGT is part of a big group of Consumer Discretionary stocks that boast a positive ESP, and investors may want to take a look at Roku (ROKU - Free Report) as well.
Slated to report earnings on February 15, 2023, Roku holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$1.70 a share six days from its next quarterly update.
Roku's Earnings ESP figure currently stands at +1.97% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$1.74.
Because both stocks hold a positive Earnings ESP, IGT and ROKU 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 >>