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These 2 Industrial Products Stocks Could Beat Earnings: Why They Should Be on Your Radar

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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.

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.

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.

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 Deere?

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. Deere (DE - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $8.29 a share, just seven days from its upcoming earnings release on August 18, 2023.

By taking the percentage difference between the $8.29 Most Accurate Estimate and the $8.12 Zacks Consensus Estimate, Deere has an Earnings ESP of +2.03%. Investors should also know that DE 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.

DE is one of just a large database of Industrial Products stocks with positive ESPs. Another solid-looking stock is Ingersoll Rand (IR - Free Report) .

Ingersoll Rand, which is readying to report earnings on November 1, 2023, sits at a Zacks Rank #1 (Strong Buy) right now. It's Most Accurate Estimate is currently $0.70 a share, and IR is 82 days out from its next earnings report.

Ingersoll Rand's Earnings ESP figure currently stands at +0.76% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.70.

DE and IR's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

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 >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Deere & Company (DE) - free report >>

Ingersoll Rand Inc. (IR) - free report >>

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