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How to Boost Your Portfolio with Top Retail and Wholesale Stocks Set to Beat Earnings
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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.
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.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.
Should You Consider Costco?
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. Costco (COST - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $5.06 a share, just 30 days from its upcoming earnings release on September 26, 2024.
Costco's Earnings ESP sits at +0.89%, which, as explained above, is calculated by taking the percentage difference between the $5.06 Most Accurate Estimate and the Zacks Consensus Estimate of $5.02. COST 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.
COST 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 Texas Roadhouse (TXRH - Free Report) as well.
Slated to report earnings on October 24, 2024, Texas Roadhouse holds a #1 (Strong Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.34 a share 58 days from its next quarterly update.
The Zacks Consensus Estimate for Texas Roadhouse is $1.31, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +2.02%.
COST and TXRH'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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How to Boost Your Portfolio with Top Retail and Wholesale Stocks Set to Beat Earnings
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.
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.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.
Should You Consider Costco?
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. Costco (COST - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $5.06 a share, just 30 days from its upcoming earnings release on September 26, 2024.
Costco's Earnings ESP sits at +0.89%, which, as explained above, is calculated by taking the percentage difference between the $5.06 Most Accurate Estimate and the Zacks Consensus Estimate of $5.02. COST 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.
COST 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 Texas Roadhouse (TXRH - Free Report) as well.
Slated to report earnings on October 24, 2024, Texas Roadhouse holds a #1 (Strong Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.34 a share 58 days from its next quarterly update.
The Zacks Consensus Estimate for Texas Roadhouse is $1.31, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +2.02%.
COST and TXRH'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 >>