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Why Investors Need to Take Advantage of These 2 Retail and Wholesale Stocks Now
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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.
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.
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 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.
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 AutoZone?
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. AutoZone (AZO - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $27.18 a share eight days away from its upcoming earnings release on February 27, 2024.
AutoZone's Earnings ESP sits at +3.83%, which, as explained above, is calculated by taking the percentage difference between the $27.18 Most Accurate Estimate and the Zacks Consensus Estimate of $26.18. AZO 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.
AZO is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Dave & Buster's (PLAY - Free Report) .
Dave & Buster's is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on March 26, 2024. PLAY's Most Accurate Estimate sits at $1.18 a share 36 days from its next earnings release.
The Zacks Consensus Estimate for Dave & Buster's is $1.14, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +3.51%.
AZO and PLAY'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
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.
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.
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 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.
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 AutoZone?
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. AutoZone (AZO - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $27.18 a share eight days away from its upcoming earnings release on February 27, 2024.
AutoZone's Earnings ESP sits at +3.83%, which, as explained above, is calculated by taking the percentage difference between the $27.18 Most Accurate Estimate and the Zacks Consensus Estimate of $26.18. AZO 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.
AZO is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Dave & Buster's (PLAY - Free Report) .
Dave & Buster's is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on March 26, 2024. PLAY's Most Accurate Estimate sits at $1.18 a share 36 days from its next earnings release.
The Zacks Consensus Estimate for Dave & Buster's is $1.14, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +3.51%.
AZO and PLAY'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 >>