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Want Better Returns? Don?t Ignore These 2 Medical Stocks Set to Beat Earnings
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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, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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 Moderna?
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. Moderna (MRNA - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at -$3.61 a share eight days away from its upcoming earnings release on August 3, 2023.
By taking the percentage difference between the -$3.61 Most Accurate Estimate and the -$3.84 Zacks Consensus Estimate, Moderna has an Earnings ESP of +5.9%. Investors should also know that MRNA 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.
MRNA is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is McKesson (MCK - Free Report) .
McKesson is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on August 2, 2023. MCK's Most Accurate Estimate sits at $5.96 a share seven days from its next earnings release.
McKesson's Earnings ESP figure currently stands at +1.93% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $5.85.
Because both stocks hold a positive Earnings ESP, MRNA and MCK 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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Want Better Returns? Don?t Ignore These 2 Medical Stocks Set to Beat Earnings
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, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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 Moderna?
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. Moderna (MRNA - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at -$3.61 a share eight days away from its upcoming earnings release on August 3, 2023.
By taking the percentage difference between the -$3.61 Most Accurate Estimate and the -$3.84 Zacks Consensus Estimate, Moderna has an Earnings ESP of +5.9%. Investors should also know that MRNA 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.
MRNA is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is McKesson (MCK - Free Report) .
McKesson is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on August 2, 2023. MCK's Most Accurate Estimate sits at $5.96 a share seven days from its next earnings release.
McKesson's Earnings ESP figure currently stands at +1.93% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $5.85.
Because both stocks hold a positive Earnings ESP, MRNA and MCK 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 >>