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How to Boost Your Portfolio with Top Basic Materials 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.
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 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.
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 Carpenter Technology?
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. Carpenter Technology (CRS - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $0.90 a share 29 days away from its upcoming earnings release on January 25, 2024.
CRS has an Earnings ESP figure of +6.83%, which, as explained above, is calculated by taking the percentage difference between the $0.90 Most Accurate Estimate and the Zacks Consensus Estimate of $0.84. Carpenter Technology 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.
CRS is part of a big group of Basic Materials stocks that boast a positive ESP, and investors may want to take a look at Agnico Eagle Mines (AEM - Free Report) as well.
Slated to report earnings on February 15, 2024, Agnico Eagle Mines holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.50 a share 50 days from its next quarterly update.
For Agnico Eagle Mines, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.44 is +14.29%.
CRS and AEM'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 Basic Materials 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.
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 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.
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 Carpenter Technology?
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. Carpenter Technology (CRS - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $0.90 a share 29 days away from its upcoming earnings release on January 25, 2024.
CRS has an Earnings ESP figure of +6.83%, which, as explained above, is calculated by taking the percentage difference between the $0.90 Most Accurate Estimate and the Zacks Consensus Estimate of $0.84. Carpenter Technology 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.
CRS is part of a big group of Basic Materials stocks that boast a positive ESP, and investors may want to take a look at Agnico Eagle Mines (AEM - Free Report) as well.
Slated to report earnings on February 15, 2024, Agnico Eagle Mines holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.50 a share 50 days from its next quarterly update.
For Agnico Eagle Mines, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.44 is +14.29%.
CRS and AEM'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 >>