Why Investors Need to Take Advantage of These 2 Transportation Stocks Now

Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

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, Explained

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 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 Copa Holdings?

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 quickly look at a qualifying stock. Copa Holdings CPA holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $3.07 a share 28 days away from its upcoming earnings release on August 7, 2024.

Copa Holdings' Earnings ESP sits at +3.01%, which, as explained above, is calculated by taking the percentage difference between the $3.07 Most Accurate Estimate and the Zacks Consensus Estimate of $2.98. CPA is also part of a large group of stocks that boast a positive ESP.

CPA is part of a big group of Transportation stocks that boast a positive ESP, and investors may want to take a look at Kirby KEX as well.

Kirby is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on August 1, 2024. KEX's Most Accurate Estimate sits at $1.42 a share 22 days from its next earnings release.

For Kirby, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.32 is +7.58%.

CPA and KEX's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

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