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How to Find Strong Retail and Wholesale Stocks Slated for Positive Earnings Surprises
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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.
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 Amazon?
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. Amazon (AMZN - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.24 a share, just one day from its upcoming earnings release on April 27, 2023.
By taking the percentage difference between the $0.24 Most Accurate Estimate and the $0.21 Zacks Consensus Estimate, Amazon has an Earnings ESP of +11.5%. Investors should also know that AMZN 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.
AMZN is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Kohl's (KSS - Free Report) is another qualifying stock you may want to consider.
Kohl's is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 18, 2023. KSS' Most Accurate Estimate sits at -$0.34 a share 22 days from its next earnings release.
The Zacks Consensus Estimate for Kohl's is -$0.44, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +23.38%.
AMZN and KSS' positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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 Find Strong Retail and Wholesale Stocks Slated for Positive Earnings Surprises
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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.
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 Amazon?
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. Amazon (AMZN - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.24 a share, just one day from its upcoming earnings release on April 27, 2023.
By taking the percentage difference between the $0.24 Most Accurate Estimate and the $0.21 Zacks Consensus Estimate, Amazon has an Earnings ESP of +11.5%. Investors should also know that AMZN 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.
AMZN is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Kohl's (KSS - Free Report) is another qualifying stock you may want to consider.
Kohl's is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 18, 2023. KSS' Most Accurate Estimate sits at -$0.34 a share 22 days from its next earnings release.
The Zacks Consensus Estimate for Kohl's is -$0.44, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +23.38%.
AMZN and KSS' positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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 >>