These 2 Basic Materials Stocks Could Beat Earnings: Why They Should Be on Your Radar
Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Newmont Corporation?
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. Newmont Corporation (NEM) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $0.55 a share one day away from its upcoming earnings release on July 24, 2024.
NEM has an Earnings ESP figure of +3.15%, which, as explained above, is calculated by taking the percentage difference between the $0.55 Most Accurate Estimate and the Zacks Consensus Estimate of $0.53. Newmont Corporation 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.
NEM is part of a big group of Basic Materials stocks that boast a positive ESP, and investors may want to take a look at B2Gold (BTG) as well.
B2Gold is a Zacks Rank #1 (Strong Buy) stock, and is getting ready to report earnings on August 7, 2024. BTG's Most Accurate Estimate sits at $0.08 a share 15 days from its next earnings release.
The Zacks Consensus Estimate for B2Gold is $0.07, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +8.11%.
NEM and BTG'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 >>
Check Out These Stocks Before They Report Earnings (Free Report)
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Zacks' new special report is designed to do exactly that. It reveals 5 promising stocks experts predict will crush earnings estimates and skyrocket in price.
Download Earnings Season Profit Secrets today, absolutely free.Newmont Corporation (NEM) : Free Stock Analysis Report
B2Gold Corp (BTG) : Free Stock Analysis Report
