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These 2 Finance 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.
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.
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 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.
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.
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.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Progressive?
The final step today is to look at a stock that meets our ESP qualifications. Progressive (PGR - Free Report) earns a #1 (Strong Buy) eight days from its next quarterly earnings release on April 11, 2024, and its Most Accurate Estimate comes in at $3.11 a share.
Progressive's Earnings ESP sits at +6.38%, which, as explained above, is calculated by taking the percentage difference between the $3.11 Most Accurate Estimate and the Zacks Consensus Estimate of $2.92. PGR 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.
PGR is part of a big group of Finance stocks that boast a positive ESP, and investors may want to take a look at Simon Property (SPG - Free Report) as well.
Slated to report earnings on May 7, 2024, Simon Property holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $2.87 a share 34 days from its next quarterly update.
For Simon Property, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.80 is +2.29%.
PGR and SPG'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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These 2 Finance 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.
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.
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 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.
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.
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.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Progressive?
The final step today is to look at a stock that meets our ESP qualifications. Progressive (PGR - Free Report) earns a #1 (Strong Buy) eight days from its next quarterly earnings release on April 11, 2024, and its Most Accurate Estimate comes in at $3.11 a share.
Progressive's Earnings ESP sits at +6.38%, which, as explained above, is calculated by taking the percentage difference between the $3.11 Most Accurate Estimate and the Zacks Consensus Estimate of $2.92. PGR 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.
PGR is part of a big group of Finance stocks that boast a positive ESP, and investors may want to take a look at Simon Property (SPG - Free Report) as well.
Slated to report earnings on May 7, 2024, Simon Property holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $2.87 a share 34 days from its next quarterly update.
For Simon Property, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.80 is +2.29%.
PGR and SPG'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 >>