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Why Investors Need to Take Advantage of These 2 Computer and Technology Stocks Now
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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
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.
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.
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 Woodward?
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. Woodward (WWD - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.35 a share, just 20 days from its upcoming earnings release on May 6, 2024.
By taking the percentage difference between the $1.35 Most Accurate Estimate and the $1.29 Zacks Consensus Estimate, Woodward has an Earnings ESP of +4.69%. Investors should also know that WWD 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.
WWD is part of a big group of Computer and Technology stocks that boast a positive ESP, and investors may want to take a look at Applied Materials (AMAT - Free Report) as well.
Slated to report earnings on May 16, 2024, Applied Materials holds a #1 (Strong Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.96 a share 30 days from its next quarterly update.
For Applied Materials, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.96 is +0.31%.
WWD and AMAT'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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Why Investors Need to Take Advantage of These 2 Computer and Technology Stocks Now
Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
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.
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.
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 Woodward?
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. Woodward (WWD - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.35 a share, just 20 days from its upcoming earnings release on May 6, 2024.
By taking the percentage difference between the $1.35 Most Accurate Estimate and the $1.29 Zacks Consensus Estimate, Woodward has an Earnings ESP of +4.69%. Investors should also know that WWD 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.
WWD is part of a big group of Computer and Technology stocks that boast a positive ESP, and investors may want to take a look at Applied Materials (AMAT - Free Report) as well.
Slated to report earnings on May 16, 2024, Applied Materials holds a #1 (Strong Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.96 a share 30 days from its next quarterly update.
For Applied Materials, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.96 is +0.31%.
WWD and AMAT'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 >>