Yahoo Finance Brian Big Idea On Earning Season
Earnings season has kicked into full gear and tonight we have a report from Netflix NFLX. Tomorrow we're going to get an earnings report from Tesla TSLA. Thursdays during earnings season we get plenty of reports and we should hear from IBM IBM and Western Digital WDC.
We have already heard from some of the big banks, but earnings season really kicks into gear this week. Earnings season is basically report card season for companies as they tell us how the last three months went. Wall Street then gives them a grade based on how they performed and the stock will either go up or down based on their performance.
There is another factor at play when we talk about how Wall Street will grade an earnings report. Forward guidance is often more important than the actual earnings numbers, as most investors are more concerned with what will happen than what has happened.
As the aggressive growth stock strategist at Zacks Investment Research I often talk about how I love to see a beat and raise quarter. I like to say that it's six months of good news all on one day. The beat is basically the previous three months coming in better than expectations and the raise in guidance tells us the next three months will be better than expected. Put those together and you have six months of good news all in one day.
We take a look at some of the bigger names in tech reporting this week and highlight what Netflix NFLX and Tesla TSLA have done recently.
So how can we figure out what companies are more likely to beat earnings?
Zacks Investment Research has developed a system that leverages the Zacks rank and has a way of identifying companies that have a high probability of beating the number. Without going into too much detail the idea is that when an analyst at a brokerage firm like Merrill Lynch or Goldman Sachs raises earnings estimates just ahead of the earnings report it must mean that they have great confidence that the company will beat the number.
When those estimates move up just ahead of the report and the company has a strong Zacks Rank the manager of surprise trader, David Bartosiak will find that company on his proprietary screen. Armed with years of experience Dave then selects the best stocks that have a chance to beat the number and continue to outperform.
Zack's Surprise Trader is a pay for service that has performed very well over the last several years. In the video we take a quick peek at the service that is particularly active during earning season.
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International Business Machines Corporation (IBM) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Western Digital Corporation (WDC) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
