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How Investors Can Grab Better Returns for Oils and Energy Using the Zacks ESP Screener
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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.
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.
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.
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 Transocean?
The final step today is to look at a stock that meets our ESP qualifications. Transocean (RIG - Free Report) earns a #3 (Hold) 27 days from its next quarterly earnings release on November 7, 2022, and its Most Accurate Estimate comes in at -$0.13 a share.
By taking the percentage difference between the -$0.13 Most Accurate Estimate and the -$0.14 Zacks Consensus Estimate, Transocean has an Earnings ESP of +5.46%. Investors should also know that RIG 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.
RIG is just one of a large group of Oils and Energy stocks with a positive ESP figure. Range Resources (RRC - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on October 24, 2022, Range Resources holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.42 a share 13 days from its next quarterly update.
For Range Resources, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.40 is +1.43%.
RIG and RRC'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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How Investors Can Grab Better Returns for Oils and Energy Using the Zacks ESP Screener
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.
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.
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.
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 Transocean?
The final step today is to look at a stock that meets our ESP qualifications. Transocean (RIG - Free Report) earns a #3 (Hold) 27 days from its next quarterly earnings release on November 7, 2022, and its Most Accurate Estimate comes in at -$0.13 a share.
By taking the percentage difference between the -$0.13 Most Accurate Estimate and the -$0.14 Zacks Consensus Estimate, Transocean has an Earnings ESP of +5.46%. Investors should also know that RIG 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.
RIG is just one of a large group of Oils and Energy stocks with a positive ESP figure. Range Resources (RRC - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on October 24, 2022, Range Resources holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.42 a share 13 days from its next quarterly update.
For Range Resources, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.40 is +1.43%.
RIG and RRC'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 >>