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How to Find Strong Retail and Wholesale Stocks Slated for Positive Earnings Surprises
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Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more 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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% 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 Burlington Stores?
The final step today is to look at a stock that meets our ESP qualifications. Burlington Stores (BURL - Free Report) earns a #1 (Strong Buy) 29 days from its next quarterly earnings release on May 23, 2024, and its Most Accurate Estimate comes in at $1.09 a share.
BURL has an Earnings ESP figure of +2.72%, which, as explained above, is calculated by taking the percentage difference between the $1.09 Most Accurate Estimate and the Zacks Consensus Estimate of $1.06. Burlington Stores 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.
BURL is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is MercadoLibre (MELI - Free Report) .
MercadoLibre is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 1, 2024. MELI's Most Accurate Estimate sits at $6.99 a share seven days from its next earnings release.
For MercadoLibre, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $6.95 is +0.5%.
BURL and MELI's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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 Retail and Wholesale Stocks Slated for Positive Earnings Surprises
Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more 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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% 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 Burlington Stores?
The final step today is to look at a stock that meets our ESP qualifications. Burlington Stores (BURL - Free Report) earns a #1 (Strong Buy) 29 days from its next quarterly earnings release on May 23, 2024, and its Most Accurate Estimate comes in at $1.09 a share.
BURL has an Earnings ESP figure of +2.72%, which, as explained above, is calculated by taking the percentage difference between the $1.09 Most Accurate Estimate and the Zacks Consensus Estimate of $1.06. Burlington Stores 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.
BURL is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is MercadoLibre (MELI - Free Report) .
MercadoLibre is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 1, 2024. MELI's Most Accurate Estimate sits at $6.99 a share seven days from its next earnings release.
For MercadoLibre, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $6.95 is +0.5%.
BURL and MELI's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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 >>