How to Boost Your Portfolio with Top Medical Stocks Set to Beat Earnings
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June 26, 2024 — 08:50 am EDT Written by Zacks Equity Research for Zacks-> Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.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.Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.The Zacks Earnings ESP, ExplainedThe 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 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 Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Elevance Health?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. Elevance Health (ELV) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $10.01 a share, just 21 days from its upcoming earnings release on July 17, 2024.Elevance Health's Earnings ESP sits at +0.06%, which, as explained above, is calculated by taking the percentage difference between the $10.01 Most Accurate Estimate and the Zacks Consensus Estimate of $10. ELV is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.ELV is just one of a large group of Medical stocks with a positive ESP figure. Medtronic (MDT) is another qualifying stock you may want to consider.Slated to report earnings on August 27, 2024, Medtronic holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.20 a share 62 days from its next quarterly update.The Zacks Consensus Estimate for Medtronic is $1.20, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.23%.ELV and MDT'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 ReportedUse 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 >> Buy 5 Stocks BEFORE Election Day Biden or Trump? Zacks is releasing a FREE Special Report, Profit from the 2024 Presidential Election (no matter who wins). Since 1950, presidential election years have been strong for the market. This report names 5 timely stocks to ride the wave of electoral excitement. They include a medical manufacturer that gained +11,000% in the last 15 years… a rental company absolutely crushing its sector… an energy powerhouse planning to grow its already large dividend by 25%... an aerospace and defense standout that just landed a potentially $80 billion contract… and a giant chipmaker building huge plants in the U.S. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportElevance Health, Inc. (ELV) : Free Stock Analysis ReportMedtronic PLC (MDT) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchThe views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.This data feed is not available at this time.