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How to Boost Your Portfolio with Top Business Services Stocks Set to Beat Earnings
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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.
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.
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.
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 Booz Allen Hamilton?
The final step today is to look at a stock that meets our ESP qualifications. Booz Allen Hamilton (BAH - Free Report) earns a #2 (Buy) 10 days from its next quarterly earnings release on May 24, 2024, and its Most Accurate Estimate comes in at $1.23 a share.
By taking the percentage difference between the $1.23 Most Accurate Estimate and the $1.22 Zacks Consensus Estimate, Booz Allen Hamilton has an Earnings ESP of +1.19%. Investors should also know that BAH 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.
BAH is just one of a large group of Business Services stocks with a positive ESP figure. Seagate (STX - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on July 24, 2024, Seagate holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.73 a share 71 days from its next quarterly update.
For Seagate, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.63 is +15.48%.
Because both stocks hold a positive Earnings ESP, BAH and STX 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 Boost Your Portfolio with Top Business Services Stocks Set to Beat Earnings
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.
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.
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.
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 Booz Allen Hamilton?
The final step today is to look at a stock that meets our ESP qualifications. Booz Allen Hamilton (BAH - Free Report) earns a #2 (Buy) 10 days from its next quarterly earnings release on May 24, 2024, and its Most Accurate Estimate comes in at $1.23 a share.
By taking the percentage difference between the $1.23 Most Accurate Estimate and the $1.22 Zacks Consensus Estimate, Booz Allen Hamilton has an Earnings ESP of +1.19%. Investors should also know that BAH 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.
BAH is just one of a large group of Business Services stocks with a positive ESP figure. Seagate (STX - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on July 24, 2024, Seagate holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.73 a share 71 days from its next quarterly update.
For Seagate, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.63 is +15.48%.
Because both stocks hold a positive Earnings ESP, BAH and STX 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 >>