How to Find Strong Medical Stocks Slated for Positive Earnings Surprises
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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
2 Stocks to Add to Your Watchlist
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. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Merck (MRK) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $1.55 a share, just 28 days from its upcoming earnings release on April 27, 2023.
MRK has an Earnings ESP figure of 8.61%, which, as explained above, is calculated by taking the percentage difference between the $1.55 Most Accurate Estimate and the Zacks Consensus Estimate of $1.42.
MRK is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is Bristol Myers Squibb (BMY).
Bristol Myers Squibb is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 27, 2023. BMY's Most Accurate Estimate sits at $2.09 a share 28 days from its next earnings release.
The Zacks Consensus Estimate for Bristol Myers Squibb is $2.01, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 3.99%.
MRK and BMY'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 >>
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Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report