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These 2 Consumer Staples Stocks Could Beat Earnings: Why They Should Be on Your Radar
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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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
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.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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 Mondelez?
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. Mondelez (MDLZ - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.87 a share, just 30 days from its upcoming earnings release on November 6, 2024.
MDLZ has an Earnings ESP figure of +3.33%, which, as explained above, is calculated by taking the percentage difference between the $0.87 Most Accurate Estimate and the Zacks Consensus Estimate of $0.84. Mondelez 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.
MDLZ is just one of a large group of Consumer Staples stocks with a positive ESP figure. Colgate-Palmolive (CL - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on October 25, 2024, Colgate-Palmolive holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.89 a share 18 days from its next quarterly update.
For Colgate-Palmolive, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.88 is +1.2%.
MDLZ and CL's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 Consumer Staples Stocks Could Beat Earnings: Why They Should Be on Your Radar
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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
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.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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 Mondelez?
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. Mondelez (MDLZ - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.87 a share, just 30 days from its upcoming earnings release on November 6, 2024.
MDLZ has an Earnings ESP figure of +3.33%, which, as explained above, is calculated by taking the percentage difference between the $0.87 Most Accurate Estimate and the Zacks Consensus Estimate of $0.84. Mondelez 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.
MDLZ is just one of a large group of Consumer Staples stocks with a positive ESP figure. Colgate-Palmolive (CL - Free Report) is another qualifying stock you may want to consider.
Slated to report earnings on October 25, 2024, Colgate-Palmolive holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.89 a share 18 days from its next quarterly update.
For Colgate-Palmolive, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.88 is +1.2%.
MDLZ and CL's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 >>