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How to Boost Your Portfolio with Top Retail and Wholesale Stocks Set to Beat Earnings
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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
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.
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.
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 Abercrombie & Fitch?
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. Abercrombie & Fitch (ANF - Free Report) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $1.17 a share, just five days from its upcoming earnings release on November 21, 2023.
By taking the percentage difference between the $1.17 Most Accurate Estimate and the $1.10 Zacks Consensus Estimate, Abercrombie & Fitch has an Earnings ESP of +6.3%. Investors should also know that ANF 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.
ANF is part of a big group of Retail and Wholesale stocks that boast a positive ESP, and investors may want to take a look at Red Robin (RRGB - Free Report) as well.
Red Robin, which is readying to report earnings on February 27, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently -$0.42 a share, and RRGB is 103 days out from its next earnings report.
Red Robin's Earnings ESP figure currently stands at +5.97% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.45.
ANF and RRGB'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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How to Boost Your Portfolio with Top Retail and Wholesale Stocks Set to Beat Earnings
Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
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.
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.
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 Abercrombie & Fitch?
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. Abercrombie & Fitch (ANF - Free Report) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $1.17 a share, just five days from its upcoming earnings release on November 21, 2023.
By taking the percentage difference between the $1.17 Most Accurate Estimate and the $1.10 Zacks Consensus Estimate, Abercrombie & Fitch has an Earnings ESP of +6.3%. Investors should also know that ANF 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.
ANF is part of a big group of Retail and Wholesale stocks that boast a positive ESP, and investors may want to take a look at Red Robin (RRGB - Free Report) as well.
Red Robin, which is readying to report earnings on February 27, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently -$0.42 a share, and RRGB is 103 days out from its next earnings report.
Red Robin's Earnings ESP figure currently stands at +5.97% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.45.
ANF and RRGB'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 >>