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These 2 Retail and Wholesale 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.
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.
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.
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 Builders FirstSource?
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. Builders FirstSource (BLDR - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.64 a share, just 13 days from its upcoming earnings release on May 7, 2024.
BLDR has an Earnings ESP figure of +8.94%, which, as explained above, is calculated by taking the percentage difference between the $2.64 Most Accurate Estimate and the Zacks Consensus Estimate of $2.42. Builders FirstSource is one of a large database 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.
BLDR is part of a big group of Retail and Wholesale stocks that boast a positive ESP, and investors may want to take a look at Tractor Supply (TSCO - Free Report) as well.
Tractor Supply is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on April 25, 2024. TSCO's Most Accurate Estimate sits at $1.71 a share one day from its next earnings release.
For Tractor Supply, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.70 is +0.5%.
BLDR and TSCO'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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These 2 Retail and Wholesale 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.
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.
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.
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 Builders FirstSource?
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. Builders FirstSource (BLDR - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.64 a share, just 13 days from its upcoming earnings release on May 7, 2024.
BLDR has an Earnings ESP figure of +8.94%, which, as explained above, is calculated by taking the percentage difference between the $2.64 Most Accurate Estimate and the Zacks Consensus Estimate of $2.42. Builders FirstSource is one of a large database 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.
BLDR is part of a big group of Retail and Wholesale stocks that boast a positive ESP, and investors may want to take a look at Tractor Supply (TSCO - Free Report) as well.
Tractor Supply is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on April 25, 2024. TSCO's Most Accurate Estimate sits at $1.71 a share one day from its next earnings release.
For Tractor Supply, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.70 is +0.5%.
BLDR and TSCO'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 >>