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These 2 Retail and Wholesale Stocks Could Beat Earnings: Why They Should Be on Your Radar
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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.
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.
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.
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.
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 Walmart?
The final step today is to look at a stock that meets our ESP qualifications. Walmart (WMT - Free Report) earns a #3 (Hold) eight days from its next quarterly earnings release on May 18, 2023, and its Most Accurate Estimate comes in at $1.31 a share.
WMT has an Earnings ESP figure of +0.49%, which, as explained above, is calculated by taking the percentage difference between the $1.31 Most Accurate Estimate and the Zacks Consensus Estimate of $1.30. Walmart 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.
WMT is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Urban Outfitters (URBN - Free Report) .
Urban Outfitters is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 23, 2023. URBN's Most Accurate Estimate sits at $0.38 a share 13 days from its next earnings release.
For Urban Outfitters, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.37 is +2.27%.
WMT and URBN'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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These 2 Retail and Wholesale Stocks Could Beat Earnings: Why They Should Be on Your Radar
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.
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.
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.
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.
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 Walmart?
The final step today is to look at a stock that meets our ESP qualifications. Walmart (WMT - Free Report) earns a #3 (Hold) eight days from its next quarterly earnings release on May 18, 2023, and its Most Accurate Estimate comes in at $1.31 a share.
WMT has an Earnings ESP figure of +0.49%, which, as explained above, is calculated by taking the percentage difference between the $1.31 Most Accurate Estimate and the Zacks Consensus Estimate of $1.30. Walmart 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.
WMT is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Urban Outfitters (URBN - Free Report) .
Urban Outfitters is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 23, 2023. URBN's Most Accurate Estimate sits at $0.38 a share 13 days from its next earnings release.
For Urban Outfitters, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.37 is +2.27%.
WMT and URBN'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 >>