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Want Better Returns? Don?t Ignore These 2 Consumer Discretionary 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.
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.
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.
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 AMC Entertainment?
The final step today is to look at a stock that meets our ESP qualifications. AMC Entertainment (AMC - Free Report) earns a #3 (Hold) five days from its next quarterly earnings release on February 28, 2023, and its Most Accurate Estimate comes in at -$0.18 a share.
By taking the percentage difference between the -$0.18 Most Accurate Estimate and the -$0.20 Zacks Consensus Estimate, AMC Entertainment has an Earnings ESP of +8.86%. Investors should also know that AMC 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.
AMC is one of just a large database of Consumer Discretionary stocks with positive ESPs. Another solid-looking stock is Marriott International (MAR - Free Report) .
Marriott International, which is readying to report earnings on May 3, 2023, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $1.86 a share, and MAR is 69 days out from its next earnings report.
The Zacks Consensus Estimate for Marriott International is $1.82, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.97%.
AMC and MAR's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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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Want Better Returns? Don?t Ignore These 2 Consumer Discretionary 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.
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.
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.
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 AMC Entertainment?
The final step today is to look at a stock that meets our ESP qualifications. AMC Entertainment (AMC - Free Report) earns a #3 (Hold) five days from its next quarterly earnings release on February 28, 2023, and its Most Accurate Estimate comes in at -$0.18 a share.
By taking the percentage difference between the -$0.18 Most Accurate Estimate and the -$0.20 Zacks Consensus Estimate, AMC Entertainment has an Earnings ESP of +8.86%. Investors should also know that AMC 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.
AMC is one of just a large database of Consumer Discretionary stocks with positive ESPs. Another solid-looking stock is Marriott International (MAR - Free Report) .
Marriott International, which is readying to report earnings on May 3, 2023, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $1.86 a share, and MAR is 69 days out from its next earnings report.
The Zacks Consensus Estimate for Marriott International is $1.82, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.97%.
AMC and MAR's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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 >>