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Want Better Returns? Don?t Ignore These 2 Medical Stocks Set to Beat Earnings
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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 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.
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 #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 Inspire Medical Systems?
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. Inspire Medical Systems (INSP - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at -$0.52 a share, just 25 days from its upcoming earnings release on May 7, 2024.
By taking the percentage difference between the -$0.52 Most Accurate Estimate and the -$0.63 Zacks Consensus Estimate, Inspire Medical Systems has an Earnings ESP of +18.04%. Investors should also know that INSP 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.
INSP is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is Incyte (INCY - Free Report) .
Incyte is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 30, 2024. INCY's Most Accurate Estimate sits at $0.85 a share 18 days from its next earnings release.
The Zacks Consensus Estimate for Incyte is $0.84, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.54%.
INSP and INCY's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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Want Better Returns? Don?t Ignore These 2 Medical Stocks Set to Beat Earnings
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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 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.
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 #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 Inspire Medical Systems?
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. Inspire Medical Systems (INSP - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at -$0.52 a share, just 25 days from its upcoming earnings release on May 7, 2024.
By taking the percentage difference between the -$0.52 Most Accurate Estimate and the -$0.63 Zacks Consensus Estimate, Inspire Medical Systems has an Earnings ESP of +18.04%. Investors should also know that INSP 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.
INSP is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is Incyte (INCY - Free Report) .
Incyte is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 30, 2024. INCY's Most Accurate Estimate sits at $0.85 a share 18 days from its next earnings release.
The Zacks Consensus Estimate for Incyte is $0.84, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.54%.
INSP and INCY's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 >>