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Want Better Returns? Don?t Ignore These 2 Industrial Products Stocks Set to Beat Earnings
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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
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 ABB?
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. ABB (ABBNY - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.77 a share, just 16 days from its upcoming earnings release on October 19, 2023.
ABBNY has an Earnings ESP figure of +12.5%, which, as explained above, is calculated by taking the percentage difference between the $0.77 Most Accurate Estimate and the Zacks Consensus Estimate of $0.68. ABB is one of a large database 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.
ABBNY is part of a big group of Industrial Products stocks that boast a positive ESP, and investors may want to take a look at Terex (TEX - Free Report) as well.
Slated to report earnings on October 26, 2023, Terex holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.73 a share 23 days from its next quarterly update.
The Zacks Consensus Estimate for Terex is $1.65, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +4.88%.
Because both stocks hold a positive Earnings ESP, ABBNY and TEX 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 Industrial Products Stocks Set to Beat Earnings
Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
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 ABB?
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. ABB (ABBNY - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.77 a share, just 16 days from its upcoming earnings release on October 19, 2023.
ABBNY has an Earnings ESP figure of +12.5%, which, as explained above, is calculated by taking the percentage difference between the $0.77 Most Accurate Estimate and the Zacks Consensus Estimate of $0.68. ABB is one of a large database 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.
ABBNY is part of a big group of Industrial Products stocks that boast a positive ESP, and investors may want to take a look at Terex (TEX - Free Report) as well.
Slated to report earnings on October 26, 2023, Terex holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.73 a share 23 days from its next quarterly update.
The Zacks Consensus Estimate for Terex is $1.65, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +4.88%.
Because both stocks hold a positive Earnings ESP, ABBNY and TEX 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 >>