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Want Better Returns? Don?t Ignore These 2 Oils and Energy 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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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 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.
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 NextEra Energy Partners?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. NextEra Energy Partners (NEP - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $0.64 a share, just 13 days from its upcoming earnings release on July 24, 2024.
NextEra Energy Partners' Earnings ESP sits at +8.11%, which, as explained above, is calculated by taking the percentage difference between the $0.64 Most Accurate Estimate and the Zacks Consensus Estimate of $0.59. NEP 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.
NEP is one of just a large database of Oils and Energy stocks with positive ESPs. Another solid-looking stock is Plains All American Pipeline (PAA - Free Report) .
Plains All American Pipeline is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on August 2, 2024. PAA's Most Accurate Estimate sits at $0.35 a share 22 days from its next earnings release.
The Zacks Consensus Estimate for Plains All American Pipeline is $0.31, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +12.9%.
Because both stocks hold a positive Earnings ESP, NEP and PAA 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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Want Better Returns? Don?t Ignore These 2 Oils and Energy 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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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 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.
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 NextEra Energy Partners?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. NextEra Energy Partners (NEP - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $0.64 a share, just 13 days from its upcoming earnings release on July 24, 2024.
NextEra Energy Partners' Earnings ESP sits at +8.11%, which, as explained above, is calculated by taking the percentage difference between the $0.64 Most Accurate Estimate and the Zacks Consensus Estimate of $0.59. NEP 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.
NEP is one of just a large database of Oils and Energy stocks with positive ESPs. Another solid-looking stock is Plains All American Pipeline (PAA - Free Report) .
Plains All American Pipeline is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on August 2, 2024. PAA's Most Accurate Estimate sits at $0.35 a share 22 days from its next earnings release.
The Zacks Consensus Estimate for Plains All American Pipeline is $0.31, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +12.9%.
Because both stocks hold a positive Earnings ESP, NEP and PAA 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 >>