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These 2 Transportation Stocks Could Beat Earnings: Why They 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.

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 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.

Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Genco Shipping & Trading?

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. Genco Shipping & Trading (GNK - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.61 a share, just nine days from its upcoming earnings release on February 22, 2023.

By taking the percentage difference between the $0.61 Most Accurate Estimate and the $0.59 Zacks Consensus Estimate, Genco Shipping & Trading has an Earnings ESP of +3.39%. Investors should also know that GNK 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.

GNK is part of a big group of Transportation stocks that boast a positive ESP, and investors may want to take a look at Herc Holdings (HRI - Free Report) as well.

Herc Holdings, which is readying to report earnings on February 14, 2023, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $3.72 a share, and HRI is one day out from its next earnings report.

Herc Holdings' Earnings ESP figure currently stands at +6.29% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.50.

GNK and HRI's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

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:


Genco Shipping & Trading Limited (GNK) - free report >>

Herc Holdings Inc. (HRI) - free report >>

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