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Why Investors Need to Take Advantage of These 2 Finance Stocks Now
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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.
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.
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 Lincoln National?
The final step today is to look at a stock that meets our ESP qualifications. Lincoln National (LNC - Free Report) earns a #3 (Hold) 21 days from its next quarterly earnings release on August 2, 2023, and its Most Accurate Estimate comes in at $1.86 a share.
By taking the percentage difference between the $1.86 Most Accurate Estimate and the $1.84 Zacks Consensus Estimate, Lincoln National has an Earnings ESP of +1%. Investors should also know that LNC 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.
LNC is just one of a large group of Finance stocks with a positive ESP figure. Corebridge Financial (CRBG - Free Report) is another qualifying stock you may want to consider.
Corebridge Financial is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on August 4, 2023. CRBG's Most Accurate Estimate sits at $0.99 a share 23 days from its next earnings release.
The Zacks Consensus Estimate for Corebridge Financial is $0.96, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +2.42%.
LNC and CRBG'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
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.
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.
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 Lincoln National?
The final step today is to look at a stock that meets our ESP qualifications. Lincoln National (LNC - Free Report) earns a #3 (Hold) 21 days from its next quarterly earnings release on August 2, 2023, and its Most Accurate Estimate comes in at $1.86 a share.
By taking the percentage difference between the $1.86 Most Accurate Estimate and the $1.84 Zacks Consensus Estimate, Lincoln National has an Earnings ESP of +1%. Investors should also know that LNC 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.
LNC is just one of a large group of Finance stocks with a positive ESP figure. Corebridge Financial (CRBG - Free Report) is another qualifying stock you may want to consider.
Corebridge Financial is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on August 4, 2023. CRBG's Most Accurate Estimate sits at $0.99 a share 23 days from its next earnings release.
The Zacks Consensus Estimate for Corebridge Financial is $0.96, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +2.42%.
LNC and CRBG'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 >>