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How to Find Strong Business Services Stocks Slated for Positive Earnings Surprises
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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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 Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
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.
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 Clean Harbors?
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. Clean Harbors (CLH - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.21 a share, just 30 days from its upcoming earnings release on May 1, 2024.
By taking the percentage difference between the $1.21 Most Accurate Estimate and the $1.16 Zacks Consensus Estimate, Clean Harbors has an Earnings ESP of +4.49%. Investors should also know that CLH 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.
CLH is one of just a large database of Business Services stocks with positive ESPs. Another solid-looking stock is DocuSign (DOCU - Free Report) .
Slated to report earnings on June 13, 2024, DocuSign holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.79 a share 73 days from its next quarterly update.
For DocuSign, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.77 is +1.98%.
CLH and DOCU'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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How to Find Strong Business Services Stocks Slated for Positive Earnings Surprises
Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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 Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
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.
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 Clean Harbors?
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. Clean Harbors (CLH - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.21 a share, just 30 days from its upcoming earnings release on May 1, 2024.
By taking the percentage difference between the $1.21 Most Accurate Estimate and the $1.16 Zacks Consensus Estimate, Clean Harbors has an Earnings ESP of +4.49%. Investors should also know that CLH 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.
CLH is one of just a large database of Business Services stocks with positive ESPs. Another solid-looking stock is DocuSign (DOCU - Free Report) .
Slated to report earnings on June 13, 2024, DocuSign holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.79 a share 73 days from its next quarterly update.
For DocuSign, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.77 is +1.98%.
CLH and DOCU'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 >>