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Why Investors Need to Take Advantage of These 2 Retail and Wholesale Stocks Now
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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 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.
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.
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 Expedia?
The final step today is to look at a stock that meets our ESP qualifications. Expedia (EXPE - Free Report) earns a #3 (Hold) three days from its next quarterly earnings release on February 8, 2024, and its Most Accurate Estimate comes in at $1.75 a share.
Expedia's Earnings ESP sits at +5%, which, as explained above, is calculated by taking the percentage difference between the $1.75 Most Accurate Estimate and the Zacks Consensus Estimate of $1.67. EXPE 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.
EXPE 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 Wayfair (W - Free Report) as well.
Wayfair is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on February 22, 2024. W's Most Accurate Estimate sits at -$0.20 a share 17 days from its next earnings release.
Wayfair's Earnings ESP figure currently stands at +8.31% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.22.
EXPE and W'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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Why Investors Need to Take Advantage of These 2 Retail and Wholesale Stocks Now
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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 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.
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.
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 Expedia?
The final step today is to look at a stock that meets our ESP qualifications. Expedia (EXPE - Free Report) earns a #3 (Hold) three days from its next quarterly earnings release on February 8, 2024, and its Most Accurate Estimate comes in at $1.75 a share.
Expedia's Earnings ESP sits at +5%, which, as explained above, is calculated by taking the percentage difference between the $1.75 Most Accurate Estimate and the Zacks Consensus Estimate of $1.67. EXPE 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.
EXPE 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 Wayfair (W - Free Report) as well.
Wayfair is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on February 22, 2024. W's Most Accurate Estimate sits at -$0.20 a share 17 days from its next earnings release.
Wayfair's Earnings ESP figure currently stands at +8.31% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.22.
EXPE and W'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 >>