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How to Boost Your Portfolio with Top Industrial Products Stocks Set to Beat Earnings
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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.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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.
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 Caterpillar?
The final step today is to look at a stock that meets our ESP qualifications. Caterpillar (CAT - Free Report) earns a #3 (Hold) 29 days from its next quarterly earnings release on April 25, 2024, and its Most Accurate Estimate comes in at $5.15 a share.
By taking the percentage difference between the $5.15 Most Accurate Estimate and the $5.10 Zacks Consensus Estimate, Caterpillar has an Earnings ESP of +1.06%. Investors should also know that CAT 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.
CAT is just one of a large group of Industrial Products stocks with a positive ESP figure. Agco (AGCO - Free Report) is another qualifying stock you may want to consider.
Agco is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 7, 2024. AGCO's Most Accurate Estimate sits at $2.40 a share 41 days from its next earnings release.
Agco's Earnings ESP figure currently stands at +3.69% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.31.
Because both stocks hold a positive Earnings ESP, CAT and AGCO 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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How to Boost Your Portfolio with Top Industrial Products Stocks Set to Beat Earnings
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.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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.
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 Caterpillar?
The final step today is to look at a stock that meets our ESP qualifications. Caterpillar (CAT - Free Report) earns a #3 (Hold) 29 days from its next quarterly earnings release on April 25, 2024, and its Most Accurate Estimate comes in at $5.15 a share.
By taking the percentage difference between the $5.15 Most Accurate Estimate and the $5.10 Zacks Consensus Estimate, Caterpillar has an Earnings ESP of +1.06%. Investors should also know that CAT 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.
CAT is just one of a large group of Industrial Products stocks with a positive ESP figure. Agco (AGCO - Free Report) is another qualifying stock you may want to consider.
Agco is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 7, 2024. AGCO's Most Accurate Estimate sits at $2.40 a share 41 days from its next earnings release.
Agco's Earnings ESP figure currently stands at +3.69% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.31.
Because both stocks hold a positive Earnings ESP, CAT and AGCO 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 >>