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How to Find Strong Oils and Energy Stocks Slated for Positive Earnings Surprises
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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.
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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 Canadian Natural Resources?
The final step today is to look at a stock that meets our ESP qualifications. Canadian Natural Resources (CNQ - Free Report) earns a #3 (Hold) nine days from its next quarterly earnings release on February 29, 2024, and its Most Accurate Estimate comes in at $1.58 a share.
By taking the percentage difference between the $1.58 Most Accurate Estimate and the $1.53 Zacks Consensus Estimate, Canadian Natural Resources has an Earnings ESP of +3.27%. Investors should also know that CNQ 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.
CNQ is part of a big group of Oils and Energy stocks that boast a positive ESP, and investors may want to take a look at Kinder Morgan (KMI - Free Report) as well.
Slated to report earnings on April 17, 2024, Kinder Morgan holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.34 a share 57 days from its next quarterly update.
The Zacks Consensus Estimate for Kinder Morgan is $0.32, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +5.87%.
Because both stocks hold a positive Earnings ESP, CNQ and KMI 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 Oils and Energy Stocks Slated for Positive Earnings Surprises
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.
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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 Canadian Natural Resources?
The final step today is to look at a stock that meets our ESP qualifications. Canadian Natural Resources (CNQ - Free Report) earns a #3 (Hold) nine days from its next quarterly earnings release on February 29, 2024, and its Most Accurate Estimate comes in at $1.58 a share.
By taking the percentage difference between the $1.58 Most Accurate Estimate and the $1.53 Zacks Consensus Estimate, Canadian Natural Resources has an Earnings ESP of +3.27%. Investors should also know that CNQ 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.
CNQ is part of a big group of Oils and Energy stocks that boast a positive ESP, and investors may want to take a look at Kinder Morgan (KMI - Free Report) as well.
Slated to report earnings on April 17, 2024, Kinder Morgan holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.34 a share 57 days from its next quarterly update.
The Zacks Consensus Estimate for Kinder Morgan is $0.32, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +5.87%.
Because both stocks hold a positive Earnings ESP, CNQ and KMI 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 >>