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Why Investors Need to Take Advantage of These 2 Transportation 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.
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.
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.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% 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 Union Pacific?
The final step today is to look at a stock that meets our ESP qualifications. Union Pacific (UNP - Free Report) earns a #3 (Hold) 29 days from its next quarterly earnings release on April 18, 2024, and its Most Accurate Estimate comes in at $2.76 a share.
Union Pacific's Earnings ESP sits at +9.57%, which, as explained above, is calculated by taking the percentage difference between the $2.76 Most Accurate Estimate and the Zacks Consensus Estimate of $2.52. UNP 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.
UNP is part of a big group of Transportation stocks that boast a positive ESP, and investors may want to take a look at Star Bulk Carriers (SBLK - Free Report) as well.
Slated to report earnings on May 21, 2024, Star Bulk Carriers holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.89 a share 62 days from its next quarterly update.
The Zacks Consensus Estimate for Star Bulk Carriers is $0.87, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +2.89%.
Because both stocks hold a positive Earnings ESP, UNP and SBLK 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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Why Investors Need to Take Advantage of These 2 Transportation 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.
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.
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.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% 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 Union Pacific?
The final step today is to look at a stock that meets our ESP qualifications. Union Pacific (UNP - Free Report) earns a #3 (Hold) 29 days from its next quarterly earnings release on April 18, 2024, and its Most Accurate Estimate comes in at $2.76 a share.
Union Pacific's Earnings ESP sits at +9.57%, which, as explained above, is calculated by taking the percentage difference between the $2.76 Most Accurate Estimate and the Zacks Consensus Estimate of $2.52. UNP 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.
UNP is part of a big group of Transportation stocks that boast a positive ESP, and investors may want to take a look at Star Bulk Carriers (SBLK - Free Report) as well.
Slated to report earnings on May 21, 2024, Star Bulk Carriers holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.89 a share 62 days from its next quarterly update.
The Zacks Consensus Estimate for Star Bulk Carriers is $0.87, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +2.89%.
Because both stocks hold a positive Earnings ESP, UNP and SBLK 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 >>