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How to Boost Your Portfolio with Top Finance Stocks Set to Beat Earnings
September 18, 2024

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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.

The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

The Zacks Earnings ESP, Explained

The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more 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.

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.

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 American Express?

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. American Express (AXP - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $3.31 a share 30 days away from its upcoming earnings release on October 18, 2024.

By taking the percentage difference between the $3.31 Most Accurate Estimate and the $3.26 Zacks Consensus Estimate, American Express has an Earnings ESP of +1.52%. Investors should also know that AXP 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.

AXP is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Healthpeak (DOC - Free Report) .

Healthpeak, which is readying to report earnings on November 4, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $0.45 a share, and DOC is 47 days out from its next earnings report.

Healthpeak's Earnings ESP figure currently stands at +1.51% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.44.

AXP and DOC's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

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 >>




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


American Express Company (AXP) - free report >>

Healthpeak Properties, Inc. (DOC) - free report >>


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