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Why Investors Need to Take Advantage of These 2 Business Services Stocks Now
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 MasterCard?
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. MasterCard (MA - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $3.75 a share, just 21 days from its upcoming earnings release on October 24, 2024.
By taking the percentage difference between the $3.75 Most Accurate Estimate and the $3.72 Zacks Consensus Estimate, MasterCard has an Earnings ESP of +0.89%. Investors should also know that MA 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.
MA is part of a big group of Business Services stocks that boast a positive ESP, and investors may want to take a look at Visa (V - Free Report) as well.
Visa, which is readying to report earnings on October 22, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $2.58 a share, and V is 19 days out from its next earnings report.
Visa's Earnings ESP figure currently stands at +0.1% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.58.
Because both stocks hold a positive Earnings ESP, MA and V 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 Business Services Stocks Now
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 MasterCard?
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. MasterCard (MA - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $3.75 a share, just 21 days from its upcoming earnings release on October 24, 2024.
By taking the percentage difference between the $3.75 Most Accurate Estimate and the $3.72 Zacks Consensus Estimate, MasterCard has an Earnings ESP of +0.89%. Investors should also know that MA 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.
MA is part of a big group of Business Services stocks that boast a positive ESP, and investors may want to take a look at Visa (V - Free Report) as well.
Visa, which is readying to report earnings on October 22, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $2.58 a share, and V is 19 days out from its next earnings report.
Visa's Earnings ESP figure currently stands at +0.1% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.58.
Because both stocks hold a positive Earnings ESP, MA and V 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 >>