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How to Find Strong Retail and Wholesale Stocks Slated for Positive Earnings Surprises
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Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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.
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 Dick's Sporting Goods?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Dick's Sporting Goods (DKS - Free Report) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $3.37 a share 29 days away from its upcoming earnings release on May 24, 2023.
DKS has an Earnings ESP figure of +5.9%, which, as explained above, is calculated by taking the percentage difference between the $3.37 Most Accurate Estimate and the Zacks Consensus Estimate of $3.18. Dick's Sporting Goods 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.
DKS is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Bed Bath & Beyond .
Bed Bath & Beyond is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 26, 2023. BBBY's Most Accurate Estimate sits at -$1.44 a share one day from its next earnings release.
Bed Bath & Beyond's Earnings ESP figure currently stands at +28.25% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$2.
DKS and BBBY'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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How to Find Strong Retail and Wholesale Stocks Slated for Positive Earnings Surprises
Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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.
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 Dick's Sporting Goods?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Dick's Sporting Goods (DKS - Free Report) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $3.37 a share 29 days away from its upcoming earnings release on May 24, 2023.
DKS has an Earnings ESP figure of +5.9%, which, as explained above, is calculated by taking the percentage difference between the $3.37 Most Accurate Estimate and the Zacks Consensus Estimate of $3.18. Dick's Sporting Goods 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.
DKS is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Bed Bath & Beyond .
Bed Bath & Beyond is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 26, 2023. BBBY's Most Accurate Estimate sits at -$1.44 a share one day from its next earnings release.
Bed Bath & Beyond's Earnings ESP figure currently stands at +28.25% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$2.
DKS and BBBY'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 >>