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This 1 Retail and Wholesale Stock Could Beat Earnings: Why It Should Be on Your Radar
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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.
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.
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 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.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider GameStop?
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. GameStop (GME - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at -$0.23 a share, just 30 days from its upcoming earnings release on December 14, 2022.
GameStop's Earnings ESP sits at +20.69%, which, as explained above, is calculated by taking the percentage difference between the -$0.23 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.29. GME 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.
GME is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Expedia (EXPE - Free Report) is another qualifying stock you may want to consider.
Expedia, which is readying to report earnings on February 9, 2023, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $1.89 a share, and EXPE is 87 days out from its next earnings report.
For Expedia, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.84 is +2.22%.
GME and EXPE's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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This 1 Retail and Wholesale Stock Could Beat Earnings: Why It Should Be on Your Radar
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.
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.
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 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.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider GameStop?
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. GameStop (GME - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at -$0.23 a share, just 30 days from its upcoming earnings release on December 14, 2022.
GameStop's Earnings ESP sits at +20.69%, which, as explained above, is calculated by taking the percentage difference between the -$0.23 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.29. GME 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.
GME is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Expedia (EXPE - Free Report) is another qualifying stock you may want to consider.
Expedia, which is readying to report earnings on February 9, 2023, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $1.89 a share, and EXPE is 87 days out from its next earnings report.
For Expedia, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.84 is +2.22%.
GME and EXPE's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 >>