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These 2 Medical 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.
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.
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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 #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 Cardinal Health?
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. Cardinal Health (CAH - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.98 a share, just 10 days from its upcoming earnings release on May 2, 2024.
Cardinal Health's Earnings ESP sits at +1.11%, which, as explained above, is calculated by taking the percentage difference between the $1.98 Most Accurate Estimate and the Zacks Consensus Estimate of $1.95. CAH 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.
CAH is just one of a large group of Medical stocks with a positive ESP figure. Guardant Health (GH - Free Report) is another qualifying stock you may want to consider.
Guardant Health is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 9, 2024. GH's Most Accurate Estimate sits at -$0.66 a share 17 days from its next earnings release.
The Zacks Consensus Estimate for Guardant Health is -$0.72, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +8.55%.
CAH and GH'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 Medical 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.
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.
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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 #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 Cardinal Health?
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. Cardinal Health (CAH - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.98 a share, just 10 days from its upcoming earnings release on May 2, 2024.
Cardinal Health's Earnings ESP sits at +1.11%, which, as explained above, is calculated by taking the percentage difference between the $1.98 Most Accurate Estimate and the Zacks Consensus Estimate of $1.95. CAH 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.
CAH is just one of a large group of Medical stocks with a positive ESP figure. Guardant Health (GH - Free Report) is another qualifying stock you may want to consider.
Guardant Health is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 9, 2024. GH's Most Accurate Estimate sits at -$0.66 a share 17 days from its next earnings release.
The Zacks Consensus Estimate for Guardant Health is -$0.72, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +8.55%.
CAH and GH'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 >>