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Why Investors Need to Take Advantage of These 2 Transportation Stocks Now
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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.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
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.
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.
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 Alaska Air Group?
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. Alaska Air Group (ALK - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.38 a share, just two days from its upcoming earnings release on July 18, 2024.
Alaska Air Group's Earnings ESP sits at +1.04%, which, as explained above, is calculated by taking the percentage difference between the $2.38 Most Accurate Estimate and the Zacks Consensus Estimate of $2.36. ALK 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.
ALK is just one of a large group of Transportation stocks with a positive ESP figure. C.H. Robinson Worldwide (CHRW - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on July 31, 2024, C.H. Robinson Worldwide holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.97 a share 15 days from its next quarterly update.
The Zacks Consensus Estimate for C.H. Robinson Worldwide is $0.90, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +7.63%.
Because both stocks hold a positive Earnings ESP, ALK and CHRW 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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Why Investors Need to Take Advantage of These 2 Transportation Stocks Now
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.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
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.
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.
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 Alaska Air Group?
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. Alaska Air Group (ALK - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.38 a share, just two days from its upcoming earnings release on July 18, 2024.
Alaska Air Group's Earnings ESP sits at +1.04%, which, as explained above, is calculated by taking the percentage difference between the $2.38 Most Accurate Estimate and the Zacks Consensus Estimate of $2.36. ALK 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.
ALK is just one of a large group of Transportation stocks with a positive ESP figure. C.H. Robinson Worldwide (CHRW - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on July 31, 2024, C.H. Robinson Worldwide holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.97 a share 15 days from its next quarterly update.
The Zacks Consensus Estimate for C.H. Robinson Worldwide is $0.90, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +7.63%.
Because both stocks hold a positive Earnings ESP, ALK and CHRW 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 >>