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Why Investors Need to Take Advantage of These 2 Consumer Discretionary Stocks Now
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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
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.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% 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 Nike?
The final step today is to look at a stock that meets our ESP qualifications. Nike (NKE - Free Report) earns a #3 (Hold) 27 days from its next quarterly earnings release on March 20, 2023, and its Most Accurate Estimate comes in at $0.54 a share.
By taking the percentage difference between the $0.54 Most Accurate Estimate and the $0.50 Zacks Consensus Estimate, Nike has an Earnings ESP of +7.19%. Investors should also know that NKE 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.
NKE is just one of a large group of Consumer Discretionary stocks with a positive ESP figure. AMC Entertainment (AMC - Free Report) is another qualifying stock you may want to consider.
AMC Entertainment is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on February 28, 2023. AMC's Most Accurate Estimate sits at -$0.18 a share seven days from its next earnings release.
AMC Entertainment's Earnings ESP figure currently stands at +8.86% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.20.
Because both stocks hold a positive Earnings ESP, NKE and AMC 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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Why Investors Need to Take Advantage of These 2 Consumer Discretionary Stocks Now
Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
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.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% 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 Nike?
The final step today is to look at a stock that meets our ESP qualifications. Nike (NKE - Free Report) earns a #3 (Hold) 27 days from its next quarterly earnings release on March 20, 2023, and its Most Accurate Estimate comes in at $0.54 a share.
By taking the percentage difference between the $0.54 Most Accurate Estimate and the $0.50 Zacks Consensus Estimate, Nike has an Earnings ESP of +7.19%. Investors should also know that NKE 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.
NKE is just one of a large group of Consumer Discretionary stocks with a positive ESP figure. AMC Entertainment (AMC - Free Report) is another qualifying stock you may want to consider.
AMC Entertainment is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on February 28, 2023. AMC's Most Accurate Estimate sits at -$0.18 a share seven days from its next earnings release.
AMC Entertainment's Earnings ESP figure currently stands at +8.86% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.20.
Because both stocks hold a positive Earnings ESP, NKE and AMC 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 >>