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These 2 Retail and Wholesale Stocks Could Beat Earnings: Why They Should Be on Your Radar
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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.
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.
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.
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 #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 Wayfair?
The final step today is to look at a stock that meets our ESP qualifications. Wayfair (W - Free Report) earns a #2 (Buy) seven days from its next quarterly earnings release on February 22, 2024, and its Most Accurate Estimate comes in at -$0.19 a share.
By taking the percentage difference between the -$0.19 Most Accurate Estimate and the -$0.22 Zacks Consensus Estimate, Wayfair has an Earnings ESP of +13.64%. Investors should also know that W is one of a large group 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.
W 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 Booking Holdings (BKNG - Free Report) as well.
Booking Holdings, which is readying to report earnings on February 22, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $30.30 a share, and BKNG is seven days out from its next earnings report.
For Booking Holdings, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $29.69 is +2.07%.
Because both stocks hold a positive Earnings ESP, W and BKNG 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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These 2 Retail and Wholesale Stocks Could Beat Earnings: Why They Should Be on Your Radar
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.
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.
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.
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 #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 Wayfair?
The final step today is to look at a stock that meets our ESP qualifications. Wayfair (W - Free Report) earns a #2 (Buy) seven days from its next quarterly earnings release on February 22, 2024, and its Most Accurate Estimate comes in at -$0.19 a share.
By taking the percentage difference between the -$0.19 Most Accurate Estimate and the -$0.22 Zacks Consensus Estimate, Wayfair has an Earnings ESP of +13.64%. Investors should also know that W is one of a large group 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.
W 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 Booking Holdings (BKNG - Free Report) as well.
Booking Holdings, which is readying to report earnings on February 22, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $30.30 a share, and BKNG is seven days out from its next earnings report.
For Booking Holdings, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $29.69 is +2.07%.
Because both stocks hold a positive Earnings ESP, W and BKNG 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 >>