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How Investors Can Grab Better Returns for Construction Using the Zacks ESP Screener
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
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.
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 Boise Cascade?
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. Boise Cascade (BCC - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $4.60 a share, just 10 days from its upcoming earnings release on October 31, 2022.
By taking the percentage difference between the $4.60 Most Accurate Estimate and the $4.45 Zacks Consensus Estimate, Boise Cascade has an Earnings ESP of +3.29%. Investors should also know that BCC 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.
BCC is part of a big group of Construction stocks that boast a positive ESP, and investors may want to take a look at PulteGroup (PHM - Free Report) as well.
PulteGroup, which is readying to report earnings on October 25, 2022, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $2.75 a share, and PHM is four days out from its next earnings report.
PulteGroup's Earnings ESP figure currently stands at +0.18% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.75.
Because both stocks hold a positive Earnings ESP, BCC and PHM 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 Investors Can Grab Better Returns for Construction Using the Zacks ESP Screener
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
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.
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 Boise Cascade?
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. Boise Cascade (BCC - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $4.60 a share, just 10 days from its upcoming earnings release on October 31, 2022.
By taking the percentage difference between the $4.60 Most Accurate Estimate and the $4.45 Zacks Consensus Estimate, Boise Cascade has an Earnings ESP of +3.29%. Investors should also know that BCC 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.
BCC is part of a big group of Construction stocks that boast a positive ESP, and investors may want to take a look at PulteGroup (PHM - Free Report) as well.
PulteGroup, which is readying to report earnings on October 25, 2022, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $2.75 a share, and PHM is four days out from its next earnings report.
PulteGroup's Earnings ESP figure currently stands at +0.18% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.75.
Because both stocks hold a positive Earnings ESP, BCC and PHM 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 >>