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These 2 Industrial Products Stocks Could Beat Earnings: Why They Should Be on Your Radar
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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 Illinois Tool Works?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Illinois Tool Works (ITW - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.40 a share, just 11 days from its upcoming earnings release on August 1, 2023.
By taking the percentage difference between the $2.40 Most Accurate Estimate and the $2.39 Zacks Consensus Estimate, Illinois Tool Works has an Earnings ESP of +0.54%. Investors should also know that ITW 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.
ITW is just one of a large group of Industrial Products stocks with a positive ESP figure. A.O. Smith (AOS - Free Report) is another qualifying stock you may want to consider.
A.O. Smith, which is readying to report earnings on July 27, 2023, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $0.94 a share, and AOS is six days out from its next earnings report.
For A.O. Smith, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.91 is +2.75%.
Because both stocks hold a positive Earnings ESP, ITW and AOS 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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These 2 Industrial Products Stocks Could Beat Earnings: Why They Should Be on Your Radar
Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 Illinois Tool Works?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Illinois Tool Works (ITW - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.40 a share, just 11 days from its upcoming earnings release on August 1, 2023.
By taking the percentage difference between the $2.40 Most Accurate Estimate and the $2.39 Zacks Consensus Estimate, Illinois Tool Works has an Earnings ESP of +0.54%. Investors should also know that ITW 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.
ITW is just one of a large group of Industrial Products stocks with a positive ESP figure. A.O. Smith (AOS - Free Report) is another qualifying stock you may want to consider.
A.O. Smith, which is readying to report earnings on July 27, 2023, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $0.94 a share, and AOS is six days out from its next earnings report.
For A.O. Smith, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.91 is +2.75%.
Because both stocks hold a positive Earnings ESP, ITW and AOS 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 >>