Yahoo Finance How to Find Strong Medical Stocks Slated for Positive Earnings Surprises
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.
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.
2 Stocks to Add to Your Watchlist
The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information. 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.
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 look at a qualifying stock. McKesson (MCK) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $7.22 a share seven days away from its upcoming earnings release on May 8, 2023.
MCK has an Earnings ESP figure of 1.22%, which, as explained above, is calculated by taking the percentage difference between the $7.22 Most Accurate Estimate and the Zacks Consensus Estimate of $7.13.
MCK is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at GSK (GSK) as well.
GSK is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on July 26, 2023. GSK's Most Accurate Estimate sits at $0.84 a share 86 days from its next earnings release.
For GSK, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.83 is 0.8%.
Because both stocks hold a positive Earnings ESP, MCK and GSK could potentially post earnings beats in their next reports.
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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