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How to Find Strong Medical Stocks Slated for Positive Earnings Surprises
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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
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.
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.
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 United Therapeutics?
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. United Therapeutics (UTHR - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $6.39 a share, just one day from its upcoming earnings release on July 31, 2024.
UTHR has an Earnings ESP figure of +1.05%, which, as explained above, is calculated by taking the percentage difference between the $6.39 Most Accurate Estimate and the Zacks Consensus Estimate of $6.33. United Therapeutics is one of a large database 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.
UTHR is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at AbbVie (ABBV - Free Report) as well.
AbbVie, which is readying to report earnings on October 25, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $2.95 a share, and ABBV is 87 days out from its next earnings report.
The Zacks Consensus Estimate for AbbVie is $2.94, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.27%.
Because both stocks hold a positive Earnings ESP, UTHR and ABBV 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 Find Strong Medical Stocks Slated for Positive Earnings Surprises
Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
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.
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.
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 United Therapeutics?
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. United Therapeutics (UTHR - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $6.39 a share, just one day from its upcoming earnings release on July 31, 2024.
UTHR has an Earnings ESP figure of +1.05%, which, as explained above, is calculated by taking the percentage difference between the $6.39 Most Accurate Estimate and the Zacks Consensus Estimate of $6.33. United Therapeutics is one of a large database 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.
UTHR is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at AbbVie (ABBV - Free Report) as well.
AbbVie, which is readying to report earnings on October 25, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $2.95 a share, and ABBV is 87 days out from its next earnings report.
The Zacks Consensus Estimate for AbbVie is $2.94, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.27%.
Because both stocks hold a positive Earnings ESP, UTHR and ABBV 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 >>