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How to Find Strong Finance Stocks Slated for Positive Earnings Surprises
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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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.
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 Extra Space Storage?
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. Extra Space Storage (EXR - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.08 a share, just 16 days from its upcoming earnings release on February 22, 2023.
EXR has an Earnings ESP figure of +0.42%, which, as explained above, is calculated by taking the percentage difference between the $2.08 Most Accurate Estimate and the Zacks Consensus Estimate of $2.07. Extra Space Storage is one of a large database 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.
EXR is just one of a large group of Finance stocks with a positive ESP figure. Ally Financial (ALLY - Free Report) is another qualifying stock you may want to consider.
Ally Financial is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 13, 2023. ALLY's Most Accurate Estimate sits at $0.92 a share 66 days from its next earnings release.
Ally Financial's Earnings ESP figure currently stands at +3.91% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.89.
Because both stocks hold a positive Earnings ESP, EXR and ALLY 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 to Find Strong Finance Stocks Slated for Positive Earnings Surprises
Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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.
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 Extra Space Storage?
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. Extra Space Storage (EXR - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.08 a share, just 16 days from its upcoming earnings release on February 22, 2023.
EXR has an Earnings ESP figure of +0.42%, which, as explained above, is calculated by taking the percentage difference between the $2.08 Most Accurate Estimate and the Zacks Consensus Estimate of $2.07. Extra Space Storage is one of a large database 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.
EXR is just one of a large group of Finance stocks with a positive ESP figure. Ally Financial (ALLY - Free Report) is another qualifying stock you may want to consider.
Ally Financial is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 13, 2023. ALLY's Most Accurate Estimate sits at $0.92 a share 66 days from its next earnings release.
Ally Financial's Earnings ESP figure currently stands at +3.91% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.89.
Because both stocks hold a positive Earnings ESP, EXR and ALLY 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 >>