We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Investors Need to Take Advantage of These 2 Finance Stocks Now
Read MoreHide Full Article
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.
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.
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 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.
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 Bank of Nova Scotia?
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. Bank of Nova Scotia (BNS - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.16 a share, just 20 days from its upcoming earnings release on May 28, 2024.
Bank of Nova Scotia's Earnings ESP sits at +1.31%, which, as explained above, is calculated by taking the percentage difference between the $1.16 Most Accurate Estimate and the Zacks Consensus Estimate of $1.15. BNS 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.
BNS is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Goldman Sachs (GS - Free Report) .
Goldman Sachs, which is readying to report earnings on July 17, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $8.89 a share, and GS is 70 days out from its next earnings report.
Goldman Sachs' Earnings ESP figure currently stands at +2.45% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $8.67.
BNS and GS' 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 >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Investors Need to Take Advantage of These 2 Finance Stocks Now
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.
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.
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 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.
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 Bank of Nova Scotia?
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. Bank of Nova Scotia (BNS - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.16 a share, just 20 days from its upcoming earnings release on May 28, 2024.
Bank of Nova Scotia's Earnings ESP sits at +1.31%, which, as explained above, is calculated by taking the percentage difference between the $1.16 Most Accurate Estimate and the Zacks Consensus Estimate of $1.15. BNS 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.
BNS is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Goldman Sachs (GS - Free Report) .
Goldman Sachs, which is readying to report earnings on July 17, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $8.89 a share, and GS is 70 days out from its next earnings report.
Goldman Sachs' Earnings ESP figure currently stands at +2.45% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $8.67.
BNS and GS' 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 >>