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How Investors Can Grab Better Returns for Medical Using the Zacks ESP Screener
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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.
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.
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 Lantheus Holdings?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Lantheus Holdings holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $0.85 a share one day away from its upcoming earnings release on November 3, 2022.
Lantheus Holdings' Earnings ESP sits at +3.03%, which, as explained above, is calculated by taking the percentage difference between the $0.85 Most Accurate Estimate and the Zacks Consensus Estimate of $0.83. LNTH 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.
LNTH is just one of a large group of Medical stocks with a positive ESP figure. Illumina (ILMN - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on November 3, 2022, Illumina holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.29 a share one day from its next quarterly update.
The Zacks Consensus Estimate for Illumina is $0.29, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.59%.
Because both stocks hold a positive Earnings ESP, LNTH and ILMN 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 Medical Using the Zacks ESP Screener
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.
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.
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 Lantheus Holdings?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Lantheus Holdings holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $0.85 a share one day away from its upcoming earnings release on November 3, 2022.
Lantheus Holdings' Earnings ESP sits at +3.03%, which, as explained above, is calculated by taking the percentage difference between the $0.85 Most Accurate Estimate and the Zacks Consensus Estimate of $0.83. LNTH 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.
LNTH is just one of a large group of Medical stocks with a positive ESP figure. Illumina (ILMN - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on November 3, 2022, Illumina holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.29 a share one day from its next quarterly update.
The Zacks Consensus Estimate for Illumina is $0.29, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.59%.
Because both stocks hold a positive Earnings ESP, LNTH and ILMN 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 >>