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Why Investors Need to Take Advantage of These 2 Oils and Energy Stocks Now
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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 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.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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 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 Par Petroleum?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Par Petroleum (PARR - Free Report) holds a #1 (Strong Buy) at the moment and its Most Accurate Estimate comes in at $2.36 a share 26 days away from its upcoming earnings release on May 3, 2023.
Par Petroleum's Earnings ESP sits at +8.86%, which, as explained above, is calculated by taking the percentage difference between the $2.36 Most Accurate Estimate and the Zacks Consensus Estimate of $2.16. PARR 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.
PARR is one of just a large database of Oils and Energy stocks with positive ESPs. Another solid-looking stock is Energy Transfer LP (ET - Free Report) .
Energy Transfer LP is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 3, 2023. ET's Most Accurate Estimate sits at $0.41 a share 26 days from its next earnings release.
The Zacks Consensus Estimate for Energy Transfer LP is $0.37, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +10.81%.
Because both stocks hold a positive Earnings ESP, PARR and ET 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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Why Investors Need to Take Advantage of These 2 Oils and Energy Stocks Now
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 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.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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 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 Par Petroleum?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Par Petroleum (PARR - Free Report) holds a #1 (Strong Buy) at the moment and its Most Accurate Estimate comes in at $2.36 a share 26 days away from its upcoming earnings release on May 3, 2023.
Par Petroleum's Earnings ESP sits at +8.86%, which, as explained above, is calculated by taking the percentage difference between the $2.36 Most Accurate Estimate and the Zacks Consensus Estimate of $2.16. PARR 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.
PARR is one of just a large database of Oils and Energy stocks with positive ESPs. Another solid-looking stock is Energy Transfer LP (ET - Free Report) .
Energy Transfer LP is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 3, 2023. ET's Most Accurate Estimate sits at $0.41 a share 26 days from its next earnings release.
The Zacks Consensus Estimate for Energy Transfer LP is $0.37, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +10.81%.
Because both stocks hold a positive Earnings ESP, PARR and ET 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 >>