These 2 Basic Materials Stocks Could Beat Earnings: Why They Should Be on Your Radar

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, of course, 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 and vice versa.Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.The Zacks Earnings ESP, ExplainedThe Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more 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 #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, 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 Steel Dynamics?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. Steel Dynamics (STLD) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $1.39 a share, just 11 days from its upcoming earnings release on April 22, 2025.Steel Dynamics' Earnings ESP sits at +2.09%, which, as explained above, is calculated by taking the percentage difference between the $1.39 Most Accurate Estimate and the Zacks Consensus Estimate of $1.36. STLD 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.STLD is part of a big group of Basic Materials stocks that boast a positive ESP, and investors may want to take a look at Kinross Gold (KGC) as well.Slated to report earnings on May 6, 2025, Kinross Gold holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.25 a share 25 days from its next quarterly update.The Zacks Consensus Estimate for Kinross Gold is $0.21, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +18.07%.Because both stocks hold a positive Earnings ESP, STLD and KGC could potentially post earnings beats in their next reports.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 >>Should You Invest in Steel Dynamics, Inc. (STLD)?Before you invest in Steel Dynamics, Inc. (STLD), want to know the best stocks to buy for the next 30 days? Check out Zacks Investment Research for our free report on the 7 best stocks to buy.Zacks Investment Research has been committed to providing investors with tools and independent research since 1978. For more than a quarter century, the Zacks Rank stock-rating system has more than doubled the S&P 500 with an average gain of +24.08% per year. (These returns cover a period from January 1, 1988 through May 6, 2024.)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 Steel Dynamics, Inc. (STLD): Free Stock Analysis Report Kinross Gold Corporation (KGC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks