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How to Find Strong Retail and Wholesale Stocks Slated for Positive Earnings Surprises
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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.
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, 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.
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 AutoZone?
The final step today is to look at a stock that meets our ESP qualifications. AutoZone (AZO - Free Report) earns a #2 (Buy) six days from its next quarterly earnings release on May 21, 2024, and its Most Accurate Estimate comes in at $36.04 a share.
By taking the percentage difference between the $36.04 Most Accurate Estimate and the $35.75 Zacks Consensus Estimate, AutoZone has an Earnings ESP of +0.81%. Investors should also know that AZO 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.
AZO 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 Match Group (MTCH - Free Report) as well.
Slated to report earnings on August 6, 2024, Match Group holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.48 a share 83 days from its next quarterly update.
Match Group's Earnings ESP figure currently stands at +0.38% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.48.
Because both stocks hold a positive Earnings ESP, AZO and MTCH 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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How to Find Strong Retail and Wholesale Stocks Slated for Positive Earnings Surprises
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.
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, 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.
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 AutoZone?
The final step today is to look at a stock that meets our ESP qualifications. AutoZone (AZO - Free Report) earns a #2 (Buy) six days from its next quarterly earnings release on May 21, 2024, and its Most Accurate Estimate comes in at $36.04 a share.
By taking the percentage difference between the $36.04 Most Accurate Estimate and the $35.75 Zacks Consensus Estimate, AutoZone has an Earnings ESP of +0.81%. Investors should also know that AZO 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.
AZO 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 Match Group (MTCH - Free Report) as well.
Slated to report earnings on August 6, 2024, Match Group holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.48 a share 83 days from its next quarterly update.
Match Group's Earnings ESP figure currently stands at +0.38% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.48.
Because both stocks hold a positive Earnings ESP, AZO and MTCH 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 >>