We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
How to Find Strong Basic Materials Stocks Slated for Positive Earnings Surprises
Read MoreHide Full Article
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.
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, 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.
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.
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 #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 Freeport-McMoRan?
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. Freeport-McMoRan (FCX - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.47 a share, just 14 days from its upcoming earnings release on April 21, 2023.
By taking the percentage difference between the $0.47 Most Accurate Estimate and the $0.43 Zacks Consensus Estimate, Freeport-McMoRan has an Earnings ESP of +7.83%. Investors should also know that FCX 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.
FCX is one of just a large database of Basic Materials stocks with positive ESPs. Another solid-looking stock is United States Steel (X - Free Report) .
United States Steel is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on April 27, 2023. X's Most Accurate Estimate sits at $0.64 a share 20 days from its next earnings release.
United States Steel's Earnings ESP figure currently stands at +30.47% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.49.
Because both stocks hold a positive Earnings ESP, FCX and X 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 >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
How to Find Strong Basic Materials Stocks Slated for Positive Earnings Surprises
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.
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, 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.
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.
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 #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 Freeport-McMoRan?
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. Freeport-McMoRan (FCX - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.47 a share, just 14 days from its upcoming earnings release on April 21, 2023.
By taking the percentage difference between the $0.47 Most Accurate Estimate and the $0.43 Zacks Consensus Estimate, Freeport-McMoRan has an Earnings ESP of +7.83%. Investors should also know that FCX 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.
FCX is one of just a large database of Basic Materials stocks with positive ESPs. Another solid-looking stock is United States Steel (X - Free Report) .
United States Steel is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on April 27, 2023. X's Most Accurate Estimate sits at $0.64 a share 20 days from its next earnings release.
United States Steel's Earnings ESP figure currently stands at +30.47% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.49.
Because both stocks hold a positive Earnings ESP, FCX and X 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 >>