We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's How Investors Can Find Strong Computer and Technology Stocks with the Zacks ESP Screener
Read MoreHide Full Article
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.
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.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
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.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 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 Adobe Systems?
The final step today is to look at a stock that meets our ESP qualifications. Adobe Systems (ADBE - Free Report) earns a #3 (Hold) 30 days from its next quarterly earnings release on December 15, 2022, and its Most Accurate Estimate comes in at $3.52 a share.
By taking the percentage difference between the $3.52 Most Accurate Estimate and the $3.50 Zacks Consensus Estimate, Adobe Systems has an Earnings ESP of +0.45%. Investors should also know that ADBE 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.
ADBE is just one of a large group of Computer and Technology stocks with a positive ESP figure. Okta (OKTA - Free Report) is another qualifying stock you may want to consider.
Okta is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 30, 2022. OKTA's Most Accurate Estimate sits at -$0.23 a share 15 days from its next earnings release.
Okta's Earnings ESP figure currently stands at +3.16% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.24.
ADBE and OKTA'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 >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Here's How Investors Can Find Strong Computer and Technology Stocks with 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.
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.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
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.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 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 Adobe Systems?
The final step today is to look at a stock that meets our ESP qualifications. Adobe Systems (ADBE - Free Report) earns a #3 (Hold) 30 days from its next quarterly earnings release on December 15, 2022, and its Most Accurate Estimate comes in at $3.52 a share.
By taking the percentage difference between the $3.52 Most Accurate Estimate and the $3.50 Zacks Consensus Estimate, Adobe Systems has an Earnings ESP of +0.45%. Investors should also know that ADBE 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.
ADBE is just one of a large group of Computer and Technology stocks with a positive ESP figure. Okta (OKTA - Free Report) is another qualifying stock you may want to consider.
Okta is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 30, 2022. OKTA's Most Accurate Estimate sits at -$0.23 a share 15 days from its next earnings release.
Okta's Earnings ESP figure currently stands at +3.16% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.24.
ADBE and OKTA'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 >>