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How to Find Strong Aerospace Stocks Slated for Positive Earnings Surprises
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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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 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.
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 Northrop Grumman?
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. Northrop Grumman (NOC - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $5.89 a share, just two days from its upcoming earnings release on October 26, 2023.
NOC has an Earnings ESP figure of +1.48%, which, as explained above, is calculated by taking the percentage difference between the $5.89 Most Accurate Estimate and the Zacks Consensus Estimate of $5.81. Northrop Grumman 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.
NOC is one of just a large database of Aerospace stocks with positive ESPs. Another solid-looking stock is Virgin Galactic (SPCE - Free Report) .
Slated to report earnings on November 2, 2023, Virgin Galactic holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$0.40 a share nine days from its next quarterly update.
The Zacks Consensus Estimate for Virgin Galactic is -$0.42, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +5.21%.
Because both stocks hold a positive Earnings ESP, NOC and SPCE 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 Aerospace Stocks Slated for Positive Earnings Surprises
Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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 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.
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 Northrop Grumman?
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. Northrop Grumman (NOC - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $5.89 a share, just two days from its upcoming earnings release on October 26, 2023.
NOC has an Earnings ESP figure of +1.48%, which, as explained above, is calculated by taking the percentage difference between the $5.89 Most Accurate Estimate and the Zacks Consensus Estimate of $5.81. Northrop Grumman 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.
NOC is one of just a large database of Aerospace stocks with positive ESPs. Another solid-looking stock is Virgin Galactic (SPCE - Free Report) .
Slated to report earnings on November 2, 2023, Virgin Galactic holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$0.40 a share nine days from its next quarterly update.
The Zacks Consensus Estimate for Virgin Galactic is -$0.42, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +5.21%.
Because both stocks hold a positive Earnings ESP, NOC and SPCE 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 >>