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Why Investors Need to Take Advantage of These 2 Basic Materials Stocks Now
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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.
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.
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.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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.
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 Carpenter Technology?
The final step today is to look at a stock that meets our ESP qualifications. Carpenter Technology (CRS - Free Report) earns a #1 (Strong Buy) six days from its next quarterly earnings release on January 25, 2024, and its Most Accurate Estimate comes in at $0.86 a share.
By taking the percentage difference between the $0.86 Most Accurate Estimate and the $0.85 Zacks Consensus Estimate, Carpenter Technology has an Earnings ESP of +0.89%. Investors should also know that CRS 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.
CRS is one of just a large database of Basic Materials stocks with positive ESPs. Another solid-looking stock is Linde (LIN - Free Report) .
Slated to report earnings on February 6, 2024, Linde holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $3.51 a share 18 days from its next quarterly update.
Linde's Earnings ESP figure currently stands at +0.12% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.50.
CRS and LIN'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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Why Investors Need to Take Advantage of These 2 Basic Materials Stocks Now
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.
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.
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.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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.
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 Carpenter Technology?
The final step today is to look at a stock that meets our ESP qualifications. Carpenter Technology (CRS - Free Report) earns a #1 (Strong Buy) six days from its next quarterly earnings release on January 25, 2024, and its Most Accurate Estimate comes in at $0.86 a share.
By taking the percentage difference between the $0.86 Most Accurate Estimate and the $0.85 Zacks Consensus Estimate, Carpenter Technology has an Earnings ESP of +0.89%. Investors should also know that CRS 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.
CRS is one of just a large database of Basic Materials stocks with positive ESPs. Another solid-looking stock is Linde (LIN - Free Report) .
Slated to report earnings on February 6, 2024, Linde holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $3.51 a share 18 days from its next quarterly update.
Linde's Earnings ESP figure currently stands at +0.12% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.50.
CRS and LIN'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 >>