Q2 earnings have all but passed and investors are already
looking forward to the next round of results which begins in
October.
This "month of rest" may not be that relaxing as September is
the worst performing month in history with an average return of
-0.79% compared to +1.12% for the rest of the months in the
year. Q3 results should also begin to include more revisions
to the coming full year's expectations, which have remained
relatively unscathed for those who have been aggressive enough to
project that far out.
For the second quarter, year over year revenue growth remained
non-existent and poses a real challenge for those who are buying
into the S&P 500 at these levels. Economic data remains
flat to bearish and China's growth is continuing to slow. It seems
that the potential for QE from several major central banks is
enough to hold things up for now. But we must remember that
it all comes back to earnings and if corporate America can't
continue to deliver, sellers' justice may be swift.
About Zacks Earnings ESP
Earnings ESP is Zacks' proprietary methodology for determining
which stocks have the best chance to surprise with their next
earnings announcement. The Earnings ESP shows the percentage
difference between the Most Accurate Estimate and the
Consensus.
The Zacks ESP helps predict earnings surprises to the upside and
downside; the greater the ESP (positive or negative) the greater
the likelihood for a surprise.
I use ESP to help quantify the conviction of the analysts for a
surprise and stack the odds in my favor when I combine it with
other measurements and statistics.
This can work for bullish potential surprises (positive ESP) as
well as bearish surprises (negative ESP).
Bullish ESP Stocks
Dollar General (
DG
) is a Zacks Rank 2 stock with a positive earnings ESP of 2%
for the current quarter; the Zacks Consensus is for a profit of 64
cents, with the most accurate estimate being for 65 cents.
While it may not be the strongest ESP, Dollar General may be the
choice for consumers who are under stress. Consumer confidence,
which is at its lowest level since November of 2011 tells me that
thrifty shopping is still in vogue. Walmart also noticed that
spending patterns are showing a cash strapped consumer looking for
deals, which could be a benefit for Dollar General.
For the contrarians out there, Dollar General is off almost 12%
from its July highs which may present a value proposition.
Analyst momentum has been positive over the last 90 days and
DG is currently trading at 17 times forward earnings.
- Dollar General reports earnings on September 5th
Conns Inc. (
CONN
) is a Zacks Rank 2 stock with a positive earnings ESP of
2.6% for the current quarter. The Zacks consensus estimate is
for Q2 EPS of $0.35, with the most accurate estimate at $0,36.
The most likely reason for the lower ESP here is due to the fact
that Conn's pre-released some very favorable sales data just a
couple weeks ago. Q2 revenue at stores open at least a year
rose 22%, boosted by a jump in demand for furniture and
mattresses. Total sales of furniture and mattresses increased
50 percent to $31.9 million, while total home office sales grew 35
percent to $14.4 million.
This plays into the housing strength that we have been seeing
and is a welcome statistic in a mostly gray environment.
Conn's offers discounted goods and operates their own
consumer credit facility, making it easy for buyer with less than
perfect credit to get appliances and furnishings.
Even with the recent rally, there may still be more upside in
Conn's; analyst momentum is still strong going into the
report.
- Conn's reports earnings on September 5th
Pharmacyclics, Inc. (
PCYC
) is also a Zacks Rank 2 stock with a positive earnings ESP
of 16% for the current quarter; the Zacks Consensus is for a loss
of 25 cents, with the most accurate consensus looking for a loss of
only 21 cents.
There is no doubt that a company not making money poses a bit
more risk and the fact that the name is uncommon and hard to
pronounce doesn't make things any easier. Healthcare is a
widely debated issue, but I think we can all agree that companies
who help terminally ill patients live longer more fuller lives will
continue to prosper, no matter what happens to the curent state of
care in the U.S.
I am not going to pretend I know the specifics of Pharmacyclics
reaserch, but based off analyst action and momentum, there is a
positive bias into this next report.
- Pharmacyclics reports earnings on September 10th
Take Earnings a Step Further
If the ESP method sounds intriguing to you for improving your
portfolio performance, you should check out
Zacks
Whisper Trader
.
Not only do I utilize Earnings ESP but I also factor in several
critical data sets to create the "secret sauce" I use to achieve
almost 80% accuracy in identifying positive earnings surprises …
before they're reported.
Senior Equities Strategist, Jared Levy, is the editor of
Whisper
Trader
and can show you how to use the power of Zacks Earnings ESP
and earnings surprises for timely, steady gains.
Learn more about
Whisper
Trader
now
CONNS INC (CONN): Free Stock Analysis Report
CONNS INC (CONN): Free Stock Analysis Report
CONNS INC (CONN): Free Stock Analysis Report
CONNS INC (CONN): Free Stock Analysis Report
CONNS INC (CONN): Free Stock Analysis Report
DOLLAR GENERAL (DG): Free Stock Analysis Report
DOLLAR GENERAL (DG): Free Stock Analysis Report
DOLLAR GENERAL (DG): Free Stock Analysis Report
DOLLAR GENERAL (DG): Free Stock Analysis Report
DOLLAR GENERAL (DG): Free Stock Analysis Report
PHARMACYCLICS (PCYC): Free Stock Analysis
Report
PHARMACYCLICS (PCYC): Free Stock Analysis
Report
PHARMACYCLICS (PCYC): Free Stock Analysis
Report
PHARMACYCLICS (PCYC): Free Stock Analysis
Report
PHARMACYCLICS (PCYC): Free Stock Analysis
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