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How to Find Strong Transportation Stocks Slated for Positive Earnings Surprises
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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, 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 Copa Holdings?
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. Copa Holdings (CPA - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $4.15 a share, just nine days from its upcoming earnings release on November 15, 2023.
Copa Holdings' Earnings ESP sits at +15.06%, which, as explained above, is calculated by taking the percentage difference between the $4.15 Most Accurate Estimate and the Zacks Consensus Estimate of $3.61. CPA is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
CPA is one of just a large database of Transportation stocks with positive ESPs. Another solid-looking stock is Avis Budget Group (CAR - Free Report) .
Avis Budget Group, which is readying to report earnings on February 12, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $3.78 a share, and CAR is 98 days out from its next earnings report.
The Zacks Consensus Estimate for Avis Budget Group is $3.47, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +9.04%.
CPA and CAR'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 >>
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How to Find Strong Transportation Stocks Slated for Positive Earnings Surprises
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, 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 Copa Holdings?
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. Copa Holdings (CPA - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $4.15 a share, just nine days from its upcoming earnings release on November 15, 2023.
Copa Holdings' Earnings ESP sits at +15.06%, which, as explained above, is calculated by taking the percentage difference between the $4.15 Most Accurate Estimate and the Zacks Consensus Estimate of $3.61. CPA is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
CPA is one of just a large database of Transportation stocks with positive ESPs. Another solid-looking stock is Avis Budget Group (CAR - Free Report) .
Avis Budget Group, which is readying to report earnings on February 12, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $3.78 a share, and CAR is 98 days out from its next earnings report.
The Zacks Consensus Estimate for Avis Budget Group is $3.47, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +9.04%.
CPA and CAR'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 >>