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Want Better Returns? Don?t Ignore These 2 Business Services 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.
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 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.
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 MasterCard?
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. MasterCard (MA - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $3.08 a share, just 19 days from its upcoming earnings release on January 31, 2024.
MA has an Earnings ESP figure of +0.1%, which, as explained above, is calculated by taking the percentage difference between the $3.08 Most Accurate Estimate and the Zacks Consensus Estimate of $3.07. MasterCard 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.
MA is just one of a large group of Business Services stocks with a positive ESP figure. Affirm Holdings (AFRM - Free Report) is another qualifying stock you may want to consider.
Affirm Holdings, which is readying to report earnings on February 14, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.14 a share, and AFRM is 33 days out from its next earnings report.
Affirm Holdings' Earnings ESP figure currently stands at +93.1% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.07.
Because both stocks hold a positive Earnings ESP, MA and AFRM 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 Business Services 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.
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 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.
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 MasterCard?
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. MasterCard (MA - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $3.08 a share, just 19 days from its upcoming earnings release on January 31, 2024.
MA has an Earnings ESP figure of +0.1%, which, as explained above, is calculated by taking the percentage difference between the $3.08 Most Accurate Estimate and the Zacks Consensus Estimate of $3.07. MasterCard 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.
MA is just one of a large group of Business Services stocks with a positive ESP figure. Affirm Holdings (AFRM - Free Report) is another qualifying stock you may want to consider.
Affirm Holdings, which is readying to report earnings on February 14, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.14 a share, and AFRM is 33 days out from its next earnings report.
Affirm Holdings' Earnings ESP figure currently stands at +93.1% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.07.
Because both stocks hold a positive Earnings ESP, MA and AFRM 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 >>