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Why Investors Need to Take Advantage of These 2 Finance Stocks Now
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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.
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.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
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.
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 Morgan Stanley?
The final step today is to look at a stock that meets our ESP qualifications. Morgan Stanley (MS - Free Report) earns a #3 (Hold) 30 days from its next quarterly earnings release on April 19, 2023, and its Most Accurate Estimate comes in at $1.86 a share.
Morgan Stanley's Earnings ESP sits at +5.42%, which, as explained above, is calculated by taking the percentage difference between the $1.86 Most Accurate Estimate and the Zacks Consensus Estimate of $1.76. MS is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
MS is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Extra Space Storage (EXR - Free Report) .
Extra Space Storage is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 2, 2023. EXR's Most Accurate Estimate sits at $2.05 a share 43 days from its next earnings release.
The Zacks Consensus Estimate for Extra Space Storage is $2.05, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.26%.
MS and EXR'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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Why Investors Need to Take Advantage of These 2 Finance Stocks Now
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.
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.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
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.
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 Morgan Stanley?
The final step today is to look at a stock that meets our ESP qualifications. Morgan Stanley (MS - Free Report) earns a #3 (Hold) 30 days from its next quarterly earnings release on April 19, 2023, and its Most Accurate Estimate comes in at $1.86 a share.
Morgan Stanley's Earnings ESP sits at +5.42%, which, as explained above, is calculated by taking the percentage difference between the $1.86 Most Accurate Estimate and the Zacks Consensus Estimate of $1.76. MS is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
MS is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Extra Space Storage (EXR - Free Report) .
Extra Space Storage is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 2, 2023. EXR's Most Accurate Estimate sits at $2.05 a share 43 days from its next earnings release.
The Zacks Consensus Estimate for Extra Space Storage is $2.05, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.26%.
MS and EXR'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 >>