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These 2 Consumer Staples 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.
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.
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 Kenvue?
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. Kenvue (KVUE - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.26 a share, just 28 days from its upcoming earnings release on May 7, 2024.
Kenvue's Earnings ESP sits at +0.04%, which, as explained above, is calculated by taking the percentage difference between the $0.26 Most Accurate Estimate and the Zacks Consensus Estimate of $0.25. KVUE 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.
KVUE is part of a big group of Consumer Staples stocks that boast a positive ESP, and investors may want to take a look at Constellation Brands (STZ - Free Report) as well.
Constellation Brands, which is readying to report earnings on April 11, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $2.12 a share, and STZ is two days out from its next earnings report.
Constellation Brands' Earnings ESP figure currently stands at +0.69% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.10.
Because both stocks hold a positive Earnings ESP, KVUE and STZ 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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These 2 Consumer Staples 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.
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.
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 Kenvue?
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. Kenvue (KVUE - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.26 a share, just 28 days from its upcoming earnings release on May 7, 2024.
Kenvue's Earnings ESP sits at +0.04%, which, as explained above, is calculated by taking the percentage difference between the $0.26 Most Accurate Estimate and the Zacks Consensus Estimate of $0.25. KVUE 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.
KVUE is part of a big group of Consumer Staples stocks that boast a positive ESP, and investors may want to take a look at Constellation Brands (STZ - Free Report) as well.
Constellation Brands, which is readying to report earnings on April 11, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $2.12 a share, and STZ is two days out from its next earnings report.
Constellation Brands' Earnings ESP figure currently stands at +0.69% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.10.
Because both stocks hold a positive Earnings ESP, KVUE and STZ 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 >>