The massive sell-off that led to some historic market volatility slowly began to cool off on Tuesday afternoon, and our major indexes ended the day on a strong note. Although it is still too early to say for certain that this adjustment is over, investors do need to prepare for what is next, as the fourth-quarter earnings season isn’t over yet.
Interestingly enough, the current sell-off occurred in spite of rather impressive quarterly performances from bellwethers such as Amazon (AMZN - Free Report) , Netflix (NFLX - Free Report) , and Facebook (FB - Free Report) . This could put even more pressure on companies that are still waiting to report, especially ones that aren’t projected to report confidence-inspiring numbers (also read: Volatility Returns: Key Facts Behind Historic Stock Sell-Off).
With that in mind, one way for investors to avoid further losses is to stay away from stocks that are not expected to match or beat earnings estimates. Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to beat. Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates.
This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Today, amid rampant market volatility, we are giving our readers a free look at three weak stocks in order to help them identify the high-risk companies ahead of their upcoming reports.
1. Trivago N.V. (TRVG - Free Report)
Trivago is scheduled to report its fourth-quarter and full year 2017 results tomorrow before the opening bell. This hotel search platform has seen its stock price pop over 12% in the last 12 weeks alone. However, the German-based firm is currently a Zacks Rank #4 (Sell) and sports an Earnings ESP of -13.64%. Although TRVG has met or matched earnings estimates in the trailing two quarters, investors should hardly be pleased to see that analyst sentiment towards Trivago has plummeted recently.
2. Regal Entertainment Group
This movie theater giant has tried to adapt amid the quickly changing entertainment landscape. In fact, investors seem pleased with Regal as its shares have climbed nearly 50% since early November 2017. Yet, these same investors likely won’t be happy to note that Regal is currently a Zacks Rank #4 (Sell) and has cooled off substantially in recent weeks. On top of that, Regal rocks an Earnings ESP of -3.94%, signaling that analysts have lowered their expectations for the movie theater chain recently. Regal is set to report its Q4 and fiscal full-year earnings after the closing bell on Thursday, Feb. 8.
3. Viacom, Inc. (VIAB - Free Report)
The owner of BET Networks, MTV, Comedy Central, Spike, Nickelodeon Group, and Paramount Pictures has seen its stock price pop nearly 26% in the last 12 weeks. But Viacom could be poised to fall short of earnings estimates for the second quarter in a row when it reports its first-quarter 2018 earnings results before the opening bell on Thursday. Viacom is currently a Zacks Rank #4 (Sell) and owns an Earnings ESP of -1.64%. This does not mean the company is sure to come up short of bottom-line projections, but analysts have clearly lowered their expectations recently.
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