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How to Find Strong Medical Stocks Slated for Positive Earnings Surprises
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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.
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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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.
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 Assertio?
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. Assertio (ASRT - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.22 a share, just 26 days from its upcoming earnings release on March 8, 2023.
By taking the percentage difference between the $0.22 Most Accurate Estimate and the $0.21 Zacks Consensus Estimate, Assertio has an Earnings ESP of +2.38%. Investors should also know that ASRT 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.
ASRT is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Lantheus Holdings as well.
Slated to report earnings on February 23, 2023, Lantheus Holdings holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.98 a share 13 days from its next quarterly update.
Lantheus Holdings' Earnings ESP figure currently stands at +1.82% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.96.
ASRT and LNTH'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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How to Find Strong Medical Stocks Slated for Positive Earnings Surprises
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.
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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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.
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 Assertio?
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. Assertio (ASRT - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.22 a share, just 26 days from its upcoming earnings release on March 8, 2023.
By taking the percentage difference between the $0.22 Most Accurate Estimate and the $0.21 Zacks Consensus Estimate, Assertio has an Earnings ESP of +2.38%. Investors should also know that ASRT 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.
ASRT is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Lantheus Holdings as well.
Slated to report earnings on February 23, 2023, Lantheus Holdings holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.98 a share 13 days from its next quarterly update.
Lantheus Holdings' Earnings ESP figure currently stands at +1.82% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.96.
ASRT and LNTH'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 >>