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These 2 Retail and Wholesale Stocks Could Beat Earnings: Why They Should Be on Your Radar
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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
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 Brinker International?
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. Brinker International (EAT - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $1.71 a share, just 21 days from its upcoming earnings release on August 14, 2024.
By taking the percentage difference between the $1.71 Most Accurate Estimate and the $1.61 Zacks Consensus Estimate, Brinker International has an Earnings ESP of +6.5%. Investors should also know that EAT 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.
EAT is part of a big group of Retail and Wholesale stocks that boast a positive ESP, and investors may want to take a look at Wingstop (WING - Free Report) as well.
Slated to report earnings on July 31, 2024, Wingstop holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.82 a share seven days from its next quarterly update.
For Wingstop, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.81 is +1.24%.
EAT and WING'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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These 2 Retail and Wholesale Stocks Could Beat Earnings: Why They Should Be on Your Radar
Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
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 Brinker International?
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. Brinker International (EAT - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $1.71 a share, just 21 days from its upcoming earnings release on August 14, 2024.
By taking the percentage difference between the $1.71 Most Accurate Estimate and the $1.61 Zacks Consensus Estimate, Brinker International has an Earnings ESP of +6.5%. Investors should also know that EAT 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.
EAT is part of a big group of Retail and Wholesale stocks that boast a positive ESP, and investors may want to take a look at Wingstop (WING - Free Report) as well.
Slated to report earnings on July 31, 2024, Wingstop holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.82 a share seven days from its next quarterly update.
For Wingstop, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.81 is +1.24%.
EAT and WING'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 >>