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How to Find Strong Construction 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.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
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.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Sherwin-Williams?
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. Sherwin-Williams (SHW - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.82 a share, just 12 days from its upcoming earnings release on October 24, 2023.
Sherwin-Williams' Earnings ESP sits at +1.35%, which, as explained above, is calculated by taking the percentage difference between the $2.82 Most Accurate Estimate and the Zacks Consensus Estimate of $2.78. SHW is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
SHW is part of a big group of Construction stocks that boast a positive ESP, and investors may want to take a look at Construction Partners (ROAD - Free Report) as well.
Construction Partners, which is readying to report earnings on November 28, 2023, sits at a Zacks Rank #1 (Strong Buy) right now. It's Most Accurate Estimate is currently $0.53 a share, and ROAD is 47 days out from its next earnings report.
For Construction Partners, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.52 is +2.91%.
Because both stocks hold a positive Earnings ESP, SHW and ROAD 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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How to Find Strong Construction 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.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
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.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Sherwin-Williams?
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. Sherwin-Williams (SHW - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.82 a share, just 12 days from its upcoming earnings release on October 24, 2023.
Sherwin-Williams' Earnings ESP sits at +1.35%, which, as explained above, is calculated by taking the percentage difference between the $2.82 Most Accurate Estimate and the Zacks Consensus Estimate of $2.78. SHW is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
SHW is part of a big group of Construction stocks that boast a positive ESP, and investors may want to take a look at Construction Partners (ROAD - Free Report) as well.
Construction Partners, which is readying to report earnings on November 28, 2023, sits at a Zacks Rank #1 (Strong Buy) right now. It's Most Accurate Estimate is currently $0.53 a share, and ROAD is 47 days out from its next earnings report.
For Construction Partners, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.52 is +2.91%.
Because both stocks hold a positive Earnings ESP, SHW and ROAD 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 >>