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How to Find Strong Consumer Staples Stocks Slated for Positive Earnings Surprises
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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 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.
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.
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 Constellation Brands?
The final step today is to look at a stock that meets our ESP qualifications. Constellation Brands (STZ - Free Report) earns a #3 (Hold) 29 days from its next quarterly earnings release on July 3, 2024, and its Most Accurate Estimate comes in at $3.54 a share.
Constellation Brands' Earnings ESP sits at +1.52%, which, as explained above, is calculated by taking the percentage difference between the $3.54 Most Accurate Estimate and the Zacks Consensus Estimate of $3.49. STZ is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
STZ is part of a big group of Consumer Staples stocks that boast a positive ESP, and investors may want to take a look at Chewy (CHWY - Free Report) as well.
Slated to report earnings on September 4, 2024, Chewy holds a #1 (Strong Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.23 a share 92 days from its next quarterly update.
The Zacks Consensus Estimate for Chewy is $0.19, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +18.38%.
STZ and CHWY'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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How to Find Strong Consumer Staples Stocks Slated for Positive Earnings Surprises
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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 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.
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.
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 Constellation Brands?
The final step today is to look at a stock that meets our ESP qualifications. Constellation Brands (STZ - Free Report) earns a #3 (Hold) 29 days from its next quarterly earnings release on July 3, 2024, and its Most Accurate Estimate comes in at $3.54 a share.
Constellation Brands' Earnings ESP sits at +1.52%, which, as explained above, is calculated by taking the percentage difference between the $3.54 Most Accurate Estimate and the Zacks Consensus Estimate of $3.49. STZ is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
STZ is part of a big group of Consumer Staples stocks that boast a positive ESP, and investors may want to take a look at Chewy (CHWY - Free Report) as well.
Slated to report earnings on September 4, 2024, Chewy holds a #1 (Strong Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.23 a share 92 days from its next quarterly update.
The Zacks Consensus Estimate for Chewy is $0.19, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +18.38%.
STZ and CHWY'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 >>