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Want Better Returns? Don?t Ignore These 2 Consumer Staples 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 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.
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 Dutch Bros?
The final step today is to look at a stock that meets our ESP qualifications. Dutch Bros (BROS - Free Report) earns a #2 (Buy) 22 days from its next quarterly earnings release on November 8, 2023, and its Most Accurate Estimate comes in at $0.11 a share.
By taking the percentage difference between the $0.11 Most Accurate Estimate and the $0.08 Zacks Consensus Estimate, Dutch Bros has an Earnings ESP of +45.28%. Investors should also know that BROS 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.
BROS is just one of a large group of Consumer Staples stocks with a positive ESP figure. Coty (COTY - Free Report) is another qualifying stock you may want to consider.
Coty is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 14, 2023. COTY's Most Accurate Estimate sits at $0.17 a share 28 days from its next earnings release.
The Zacks Consensus Estimate for Coty is $0.17, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.56%.
BROS and COTY's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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 Consumer Staples 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 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.
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 Dutch Bros?
The final step today is to look at a stock that meets our ESP qualifications. Dutch Bros (BROS - Free Report) earns a #2 (Buy) 22 days from its next quarterly earnings release on November 8, 2023, and its Most Accurate Estimate comes in at $0.11 a share.
By taking the percentage difference between the $0.11 Most Accurate Estimate and the $0.08 Zacks Consensus Estimate, Dutch Bros has an Earnings ESP of +45.28%. Investors should also know that BROS 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.
BROS is just one of a large group of Consumer Staples stocks with a positive ESP figure. Coty (COTY - Free Report) is another qualifying stock you may want to consider.
Coty is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 14, 2023. COTY's Most Accurate Estimate sits at $0.17 a share 28 days from its next earnings release.
The Zacks Consensus Estimate for Coty is $0.17, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.56%.
BROS and COTY's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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 >>