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Want Better Returns? Don?t Ignore These 2 Retail and Wholesale Stocks Set to Beat Earnings
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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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.
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.
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.
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 Ulta Beauty?
The final step today is to look at a stock that meets our ESP qualifications. Ulta Beauty (ULTA - Free Report) earns a #2 (Buy) 22 days from its next quarterly earnings release on March 9, 2023, and its Most Accurate Estimate comes in at $6 a share.
ULTA has an Earnings ESP figure of +8.53%, which, as explained above, is calculated by taking the percentage difference between the $6 Most Accurate Estimate and the Zacks Consensus Estimate of $5.53. Ulta Beauty 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.
ULTA is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Dick's Sporting Goods (DKS - Free Report) .
Dick's Sporting Goods is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on March 7, 2023. DKS' Most Accurate Estimate sits at $3.09 a share 20 days from its next earnings release.
The Zacks Consensus Estimate for Dick's Sporting Goods is $2.86, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +7.97%.
Because both stocks hold a positive Earnings ESP, ULTA and DKS 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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Want Better Returns? Don?t Ignore These 2 Retail and Wholesale Stocks Set to Beat Earnings
Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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.
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.
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.
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 Ulta Beauty?
The final step today is to look at a stock that meets our ESP qualifications. Ulta Beauty (ULTA - Free Report) earns a #2 (Buy) 22 days from its next quarterly earnings release on March 9, 2023, and its Most Accurate Estimate comes in at $6 a share.
ULTA has an Earnings ESP figure of +8.53%, which, as explained above, is calculated by taking the percentage difference between the $6 Most Accurate Estimate and the Zacks Consensus Estimate of $5.53. Ulta Beauty 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.
ULTA is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Dick's Sporting Goods (DKS - Free Report) .
Dick's Sporting Goods is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on March 7, 2023. DKS' Most Accurate Estimate sits at $3.09 a share 20 days from its next earnings release.
The Zacks Consensus Estimate for Dick's Sporting Goods is $2.86, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +7.97%.
Because both stocks hold a positive Earnings ESP, ULTA and DKS 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 >>