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Why Investors Need to Take Advantage of These 2 Aerospace 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.
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.
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 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 Lockheed Martin?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Lockheed Martin (LMT - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $6.56 a share five days away from its upcoming earnings release on October 22, 2024.
By taking the percentage difference between the $6.56 Most Accurate Estimate and the $6.47 Zacks Consensus Estimate, Lockheed Martin has an Earnings ESP of +1.29%. Investors should also know that LMT 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.
LMT is just one of a large group of Aerospace stocks with a positive ESP figure. Northrop Grumman (NOC - Free Report) is another qualifying stock you may want to consider.
Northrop Grumman, which is readying to report earnings on October 24, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $6.13 a share, and NOC is seven days out from its next earnings report.
Northrop Grumman's Earnings ESP figure currently stands at +1.12% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $6.06.
Because both stocks hold a positive Earnings ESP, LMT and NOC 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 Aerospace 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.
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.
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 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 Lockheed Martin?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Lockheed Martin (LMT - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $6.56 a share five days away from its upcoming earnings release on October 22, 2024.
By taking the percentage difference between the $6.56 Most Accurate Estimate and the $6.47 Zacks Consensus Estimate, Lockheed Martin has an Earnings ESP of +1.29%. Investors should also know that LMT 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.
LMT is just one of a large group of Aerospace stocks with a positive ESP figure. Northrop Grumman (NOC - Free Report) is another qualifying stock you may want to consider.
Northrop Grumman, which is readying to report earnings on October 24, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $6.13 a share, and NOC is seven days out from its next earnings report.
Northrop Grumman's Earnings ESP figure currently stands at +1.12% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $6.06.
Because both stocks hold a positive Earnings ESP, LMT and NOC 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 >>