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These 2 Consumer Staples Stocks Could Beat Earnings: Why They Should Be on Your Radar
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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 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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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 General Mills?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. General Mills (GIS - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.05 a share, just nine days from its upcoming earnings release on March 20, 2024.
By taking the percentage difference between the $1.05 Most Accurate Estimate and the $1.04 Zacks Consensus Estimate, General Mills has an Earnings ESP of +1.3%. Investors should also know that GIS 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.
GIS is just one of a large group of Consumer Staples stocks with a positive ESP figure. Colgate-Palmolive (CL - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on April 26, 2024, Colgate-Palmolive holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.82 a share 46 days from its next quarterly update.
Colgate-Palmolive's Earnings ESP figure currently stands at +0.42% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.82.
Because both stocks hold a positive Earnings ESP, GIS and CL 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 Consumer Staples Stocks Could Beat Earnings: Why They Should Be on Your Radar
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 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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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 General Mills?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. General Mills (GIS - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.05 a share, just nine days from its upcoming earnings release on March 20, 2024.
By taking the percentage difference between the $1.05 Most Accurate Estimate and the $1.04 Zacks Consensus Estimate, General Mills has an Earnings ESP of +1.3%. Investors should also know that GIS 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.
GIS is just one of a large group of Consumer Staples stocks with a positive ESP figure. Colgate-Palmolive (CL - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on April 26, 2024, Colgate-Palmolive holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.82 a share 46 days from its next quarterly update.
Colgate-Palmolive's Earnings ESP figure currently stands at +0.42% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.82.
Because both stocks hold a positive Earnings ESP, GIS and CL 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 >>