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How to Boost Your Portfolio with Top Consumer Staples Stocks Set to Beat Earnings
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Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive 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 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.
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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 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 Kraft Heinz?
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. Kraft Heinz (KHC - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.61 a share, just 19 days from its upcoming earnings release on May 3, 2023.
KHC has an Earnings ESP figure of +1.32%, which, as explained above, is calculated by taking the percentage difference between the $0.61 Most Accurate Estimate and the Zacks Consensus Estimate of $0.60. Kraft Heinz 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.
KHC is just one of a large group of Consumer Staples stocks with a positive ESP figure. Lamb Weston (LW - Free Report) is another qualifying stock you may want to consider.
Lamb Weston is a Zacks Rank #1 (Strong Buy) stock, and is getting ready to report earnings on July 26, 2023. LW's Most Accurate Estimate sits at $1.06 a share 103 days from its next earnings release.
Lamb Weston's Earnings ESP figure currently stands at +1.85% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.04.
KHC and LW'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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How to Boost Your Portfolio with Top Consumer Staples Stocks Set to Beat Earnings
Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive 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 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.
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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 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 Kraft Heinz?
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. Kraft Heinz (KHC - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.61 a share, just 19 days from its upcoming earnings release on May 3, 2023.
KHC has an Earnings ESP figure of +1.32%, which, as explained above, is calculated by taking the percentage difference between the $0.61 Most Accurate Estimate and the Zacks Consensus Estimate of $0.60. Kraft Heinz 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.
KHC is just one of a large group of Consumer Staples stocks with a positive ESP figure. Lamb Weston (LW - Free Report) is another qualifying stock you may want to consider.
Lamb Weston is a Zacks Rank #1 (Strong Buy) stock, and is getting ready to report earnings on July 26, 2023. LW's Most Accurate Estimate sits at $1.06 a share 103 days from its next earnings release.
Lamb Weston's Earnings ESP figure currently stands at +1.85% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.04.
KHC and LW'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 >>