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Looking for Stocks with Positive Earnings Momentum? Check Out These 2 Basic Materials Names

Zacks Equity Research
·2 min read

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.

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.

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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. Commercial Metals (CMC) holds a Zacks Rank #1 at the moment and its Most Accurate Estimate comes in at $2.14 a share 24 days away from its upcoming earnings release on June 16, 2022.

By taking the percentage difference between the $2.14 Most Accurate Estimate and the $1.54 Zacks Consensus Estimate, Commercial Metals has an Earnings ESP of 38.66%.

CMC is one of just a large database of Basic Materials stocks with positive ESPs. Another solid-looking stock is Westlake Chemical (WLK).

Westlake Chemical is a Zacks Rank #1 (Strong Buy) stock, and is getting ready to report earnings on August 2, 2022. WLK's Most Accurate Estimate sits at $6.61 a share 71 days from its next earnings release.

The Zacks Consensus Estimate for Westlake Chemical is $5.55, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 19.08%.

CMC and WLK'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 >>


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 report
 
Commercial Metals Company (CMC) : Free Stock Analysis Report
 
Westlake Corp. (WLK) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research