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These 2 Consumer Discretionary Stocks Could Beat Earnings: Why They Should Be on Your Radar
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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
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 On Holding?
The final step today is to look at a stock that meets our ESP qualifications. On Holding (ONON - Free Report) earns a #1 (Strong Buy) four days from its next quarterly earnings release on August 15, 2023, and its Most Accurate Estimate comes in at $0.15 a share.
ONON has an Earnings ESP figure of +11.6%, which, as explained above, is calculated by taking the percentage difference between the $0.15 Most Accurate Estimate and the Zacks Consensus Estimate of $0.13. On Holding 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.
ONON is one of just a large database of Consumer Discretionary stocks with positive ESPs. Another solid-looking stock is MGM Resorts (MGM - Free Report) .
MGM Resorts is a Zacks Rank #1 (Strong Buy) stock, and is getting ready to report earnings on November 1, 2023. MGM's Most Accurate Estimate sits at $0.65 a share 82 days from its next earnings release.
MGM Resorts' Earnings ESP figure currently stands at +2.19% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.64.
Because both stocks hold a positive Earnings ESP, ONON and MGM 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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These 2 Consumer Discretionary Stocks Could Beat Earnings: Why They Should Be on Your Radar
Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
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 On Holding?
The final step today is to look at a stock that meets our ESP qualifications. On Holding (ONON - Free Report) earns a #1 (Strong Buy) four days from its next quarterly earnings release on August 15, 2023, and its Most Accurate Estimate comes in at $0.15 a share.
ONON has an Earnings ESP figure of +11.6%, which, as explained above, is calculated by taking the percentage difference between the $0.15 Most Accurate Estimate and the Zacks Consensus Estimate of $0.13. On Holding 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.
ONON is one of just a large database of Consumer Discretionary stocks with positive ESPs. Another solid-looking stock is MGM Resorts (MGM - Free Report) .
MGM Resorts is a Zacks Rank #1 (Strong Buy) stock, and is getting ready to report earnings on November 1, 2023. MGM's Most Accurate Estimate sits at $0.65 a share 82 days from its next earnings release.
MGM Resorts' Earnings ESP figure currently stands at +2.19% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.64.
Because both stocks hold a positive Earnings ESP, ONON and MGM 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 >>