How to Find Strong Industrial Products 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.
The earnings figure itself is key, 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 even higher.
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.
The final step today is to look at a stock that meets our ESP qualifications. A.O. Smith (AOS) earns a Zacks Rank #2 seven days from its next quarterly earnings release on July 27, 2023, and its Most Accurate Estimate comes in at $0.98 a share.
By taking the percentage difference between the $0.98 Most Accurate Estimate and the $0.93 Zacks Consensus Estimate, A.O. Smith has an Earnings ESP of 5.87%.
AOS is one of just a large database of Industrial Products stocks with positive ESPs. Another solid-looking stock is Illinois Tool Works (ITW).
Illinois Tool Works is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on August 1, 2023. ITW's Most Accurate Estimate sits at $2.40 a share 12 days from its next earnings release.
The Zacks Consensus Estimate for Illinois Tool Works is $2.39, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.54%.
Because both stocks hold a positive Earnings ESP, AOS and ITW 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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A. O. Smith Corporation (AOS) : Free Stock Analysis Report
Illinois Tool Works Inc. (ITW) : Free Stock Analysis Report
