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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.
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 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.
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 Domino's Pizza?
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. Domino's Pizza (DPZ - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $4.44 a share 13 days away from its upcoming earnings release on February 26, 2024.
Domino's Pizza's Earnings ESP sits at +1.86%, which, as explained above, is calculated by taking the percentage difference between the $4.44 Most Accurate Estimate and the Zacks Consensus Estimate of $4.35. DPZ 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.
DPZ is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Costco (COST - Free Report) is another qualifying stock you may want to consider.
Costco, which is readying to report earnings on March 7, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $3.65 a share, and COST is 23 days out from its next earnings report.
For Costco, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.59 is +1.5%.
DPZ and COST's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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.
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 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.
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 Domino's Pizza?
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. Domino's Pizza (DPZ - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $4.44 a share 13 days away from its upcoming earnings release on February 26, 2024.
Domino's Pizza's Earnings ESP sits at +1.86%, which, as explained above, is calculated by taking the percentage difference between the $4.44 Most Accurate Estimate and the Zacks Consensus Estimate of $4.35. DPZ 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.
DPZ is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Costco (COST - Free Report) is another qualifying stock you may want to consider.
Costco, which is readying to report earnings on March 7, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $3.65 a share, and COST is 23 days out from its next earnings report.
For Costco, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.59 is +1.5%.
DPZ and COST's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 >>