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How to Boost Your Portfolio with Top Consumer Staples 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.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% 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 Dutch Bros?
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. Dutch Bros (BROS - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $0.03 a share 30 days away from its upcoming earnings release on February 28, 2024.
BROS has an Earnings ESP figure of +9.38%, which, as explained above, is calculated by taking the percentage difference between the $0.03 Most Accurate Estimate and the Zacks Consensus Estimate of $0.02. Dutch Bros 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.
BROS is just one of a large group of Consumer Staples stocks with a positive ESP figure. Estee Lauder (EL - Free Report) is another qualifying stock you may want to consider.
Estee Lauder is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on February 5, 2024. EL's Most Accurate Estimate sits at $0.57 a share seven days from its next earnings release.
The Zacks Consensus Estimate for Estee Lauder is $0.55, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +3.55%.
Because both stocks hold a positive Earnings ESP, BROS and EL 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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How to Boost Your Portfolio with Top Consumer Staples 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.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% 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 Dutch Bros?
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. Dutch Bros (BROS - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $0.03 a share 30 days away from its upcoming earnings release on February 28, 2024.
BROS has an Earnings ESP figure of +9.38%, which, as explained above, is calculated by taking the percentage difference between the $0.03 Most Accurate Estimate and the Zacks Consensus Estimate of $0.02. Dutch Bros 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.
BROS is just one of a large group of Consumer Staples stocks with a positive ESP figure. Estee Lauder (EL - Free Report) is another qualifying stock you may want to consider.
Estee Lauder is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on February 5, 2024. EL's Most Accurate Estimate sits at $0.57 a share seven days from its next earnings release.
The Zacks Consensus Estimate for Estee Lauder is $0.55, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +3.55%.
Because both stocks hold a positive Earnings ESP, BROS and EL 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 >>