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How to Boost Your Portfolio with Top Consumer Discretionary Stocks Set to Beat Earnings
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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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 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 Skechers?
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. Skechers (SKX - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $1.13 a share 23 days away from its upcoming earnings release on April 25, 2024.
SKX has an Earnings ESP figure of +2.74%, which, as explained above, is calculated by taking the percentage difference between the $1.13 Most Accurate Estimate and the Zacks Consensus Estimate of $1.10. Skechers is one of a large database 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.
SKX is one of just a large database of Consumer Discretionary stocks with positive ESPs. Another solid-looking stock is Warner Bros. Discovery (WBD - Free Report) .
Slated to report earnings on May 3, 2024, Warner Bros. Discovery holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0 a share 31 days from its next quarterly update.
Warner Bros. Discovery's Earnings ESP figure currently stands at +100% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.23.
SKX and WBD'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 Boost Your Portfolio with Top Consumer Discretionary Stocks Set to Beat Earnings
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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 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 Skechers?
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. Skechers (SKX - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $1.13 a share 23 days away from its upcoming earnings release on April 25, 2024.
SKX has an Earnings ESP figure of +2.74%, which, as explained above, is calculated by taking the percentage difference between the $1.13 Most Accurate Estimate and the Zacks Consensus Estimate of $1.10. Skechers is one of a large database 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.
SKX is one of just a large database of Consumer Discretionary stocks with positive ESPs. Another solid-looking stock is Warner Bros. Discovery (WBD - Free Report) .
Slated to report earnings on May 3, 2024, Warner Bros. Discovery holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0 a share 31 days from its next quarterly update.
Warner Bros. Discovery's Earnings ESP figure currently stands at +100% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.23.
SKX and WBD'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 >>