As I write this, the markets are pulling back, awaiting earnings
from Alcoa (
AA
- Zacks Rank 3 ) and Yum! Brands (
YUM
- Zacks Rank 3); both reports are due out this evening after the
close. The earnings tone and forecasts set by these two
companies will be key as they both have far reaching business that
touch heavy industry, small business and the consumer.
Market sentiment remains cautiously bullish with many of the big
sell side firms still looking for a big correction. Goldman
Sachs reiterated their
bearish
sentiments today, with an S&P 500 target of 1250 in 2012.
With over 140 companies reporting results this week, we
should begin to get a shape of the future of earnings fairly
quickly. If we begin to see major downward revisions to
FY2013 estimates, then one would expect commensurate corrections in
the S&P 500 to account for those revisions.
There will be always be standouts in every earnings season and the
goal of the Zacks ESP is to highlight those companies with an
elevated chance of beating the expectations.
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
Take Two Interactive (
TTWO
) is a Zacks Rank 3 stock with a positive earnings ESP of 80%
for the current quarter; the Zacks Consensus is for a loss of 20
cents in Q3 and a most accurate forecast of a loss of only 4
cents. On October 3rd, Piper Jaffray lifted its share target
and noted several postives in the stock's fundamentals (TTWO is
trading at only 6.8 times forward earnings). Analysts there
are looking for TTWO to come in at the high end of revenue
estimates. Their new game, "Enemy Unknown" just because
available in the U.S.
It's been a tough year for TTWO; shares tumbled more than 50% to a
low of $7.40, but have since recovered just below the $11.00 level.
- Take Two Interactive reports earnings on October 24th
U.S. Steel (
X
) is a Zacks Rank 3 stock with a positive earnings ESP of
68.75% for the current quarter; the Zacks Consensus is for a profit
of 2 cents in the third quarter.
Given the improvements we have seen in U.S. economic data, U.S.
Steel may seen unexpected strength in the quarter. Shares are
close to lows only seen in the 2009 crash and before in 2004.
- U.S. Steel reports earnings on October 23rd
USG Corporation (
USG
) is a Zacks Rank 3 stock with a positive earnings ESP of
41.46% for the current quarter. The Zacks consensus estimate
is for a Q3 loss of $0.11, with the most accurate estimate at
-$0.06.
You might buy your home from Toll Brothers, Lennar or Ryland Homes,
but many of the support and finishing materials used to build those
homes most likely come from USG. Everything from drywall,
joint compound and corner molding to backer boards for your
tile and even roofing material are produced by USG.
New home sales have been steadily growing and the industry's
strength was confirmed by several home builders last quarter and
confirmed by government sales data.
Given the trends, it could be a strong quarter for USG.
- USG Corp reports earnings on October 18th
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 better than 80% accuracy in identifying positive earnings
surprises… before they're reported.
Senior Equities Strategist, Jared A 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
ALCOA INC (AA): Free Stock Analysis Report
ALCOA INC (AA): Free Stock Analysis Report
ALCOA INC (AA): Free Stock Analysis Report
TAKE-TWO INTER (TTWO): Free Stock Analysis
Report
TAKE-TWO INTER (TTWO): Free Stock Analysis
Report
TAKE-TWO INTER (TTWO): Free Stock Analysis
Report
USG CORP (USG): Free Stock Analysis Report
USG CORP (USG): Free Stock Analysis Report
USG CORP (USG): Free Stock Analysis Report
UTD STATES STL (X): Free Stock Analysis Report
UTD STATES STL (X): Free Stock Analysis Report
UTD STATES STL (X): Free Stock Analysis Report
YUM! BRANDS INC (YUM): Free Stock Analysis
Report
YUM! BRANDS INC (YUM): Free Stock Analysis
Report
YUM! BRANDS INC (YUM): Free Stock Analysis
Report
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