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Why Investors Need to Take Advantage of These 2 Finance Stocks Now
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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.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive 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 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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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.
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 Pebblebrook Hotel?
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. Pebblebrook Hotel (PEB - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.18 a share, just seven days from its upcoming earnings release on April 23, 2024.
Pebblebrook Hotel's Earnings ESP sits at +12.5%, which, as explained above, is calculated by taking the percentage difference between the $0.18 Most Accurate Estimate and the Zacks Consensus Estimate of $0.16. PEB 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.
PEB is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Federated Hermes (FHI - Free Report) .
Slated to report earnings on April 25, 2024, Federated Hermes holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.89 a share nine days from its next quarterly update.
The Zacks Consensus Estimate for Federated Hermes is $0.87, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.45%.
Because both stocks hold a positive Earnings ESP, PEB and FHI 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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Why Investors Need to Take Advantage of These 2 Finance Stocks Now
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.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive 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 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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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.
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 Pebblebrook Hotel?
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. Pebblebrook Hotel (PEB - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.18 a share, just seven days from its upcoming earnings release on April 23, 2024.
Pebblebrook Hotel's Earnings ESP sits at +12.5%, which, as explained above, is calculated by taking the percentage difference between the $0.18 Most Accurate Estimate and the Zacks Consensus Estimate of $0.16. PEB 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.
PEB is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Federated Hermes (FHI - Free Report) .
Slated to report earnings on April 25, 2024, Federated Hermes holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.89 a share nine days from its next quarterly update.
The Zacks Consensus Estimate for Federated Hermes is $0.87, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.45%.
Because both stocks hold a positive Earnings ESP, PEB and FHI 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 >>