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Why Investors Need to Take Advantage of These 2 Finance 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.
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.
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 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 Bank of America?
The final step today is to look at a stock that meets our ESP qualifications. Bank of America (BAC - Free Report) earns a #3 (Hold) 25 days from its next quarterly earnings release on April 18, 2023, and its Most Accurate Estimate comes in at $0.86 a share.
BAC has an Earnings ESP figure of +5.82%, which, as explained above, is calculated by taking the percentage difference between the $0.86 Most Accurate Estimate and the Zacks Consensus Estimate of $0.81. Bank of America is one of a large database 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.
BAC is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Ladder Capital (LADR - Free Report) .
Ladder Capital is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 27, 2023. LADR's Most Accurate Estimate sits at $0.30 a share 34 days from its next earnings release.
The Zacks Consensus Estimate for Ladder Capital is $0.29, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +5.26%.
BAC and LADR'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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Why Investors Need to Take Advantage of These 2 Finance 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.
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.
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 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 Bank of America?
The final step today is to look at a stock that meets our ESP qualifications. Bank of America (BAC - Free Report) earns a #3 (Hold) 25 days from its next quarterly earnings release on April 18, 2023, and its Most Accurate Estimate comes in at $0.86 a share.
BAC has an Earnings ESP figure of +5.82%, which, as explained above, is calculated by taking the percentage difference between the $0.86 Most Accurate Estimate and the Zacks Consensus Estimate of $0.81. Bank of America is one of a large database 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.
BAC is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Ladder Capital (LADR - Free Report) .
Ladder Capital is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 27, 2023. LADR's Most Accurate Estimate sits at $0.30 a share 34 days from its next earnings release.
The Zacks Consensus Estimate for Ladder Capital is $0.29, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +5.26%.
BAC and LADR'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 >>