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Why Investors Need to Take Advantage of These 2 Oils and Energy 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.
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.
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.
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.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, 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 Marathon Oil?
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. Marathon Oil (MRO - Free Report) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $0.79 a share 30 days away from its upcoming earnings release on November 1, 2023.
By taking the percentage difference between the $0.79 Most Accurate Estimate and the $0.63 Zacks Consensus Estimate, Marathon Oil has an Earnings ESP of +24.9%. Investors should also know that MRO 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.
MRO is part of a big group of Oils and Energy stocks that boast a positive ESP, and investors may want to take a look at Canadian Natural Resources (CNQ - Free Report) as well.
Slated to report earnings on November 2, 2023, Canadian Natural Resources holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.54 a share 31 days from its next quarterly update.
The Zacks Consensus Estimate for Canadian Natural Resources is $1.38, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +11.23%.
Because both stocks hold a positive Earnings ESP, MRO and CNQ 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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Why Investors Need to Take Advantage of These 2 Oils and Energy 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.
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.
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.
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.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, 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 Marathon Oil?
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. Marathon Oil (MRO - Free Report) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $0.79 a share 30 days away from its upcoming earnings release on November 1, 2023.
By taking the percentage difference between the $0.79 Most Accurate Estimate and the $0.63 Zacks Consensus Estimate, Marathon Oil has an Earnings ESP of +24.9%. Investors should also know that MRO 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.
MRO is part of a big group of Oils and Energy stocks that boast a positive ESP, and investors may want to take a look at Canadian Natural Resources (CNQ - Free Report) as well.
Slated to report earnings on November 2, 2023, Canadian Natural Resources holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.54 a share 31 days from its next quarterly update.
The Zacks Consensus Estimate for Canadian Natural Resources is $1.38, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +11.23%.
Because both stocks hold a positive Earnings ESP, MRO and CNQ 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 >>