Very Loud Earnings Whispers for Your Stocks

Earnings season is a vital test for all stocks. 

You either wake up in the morning to a glorious beat, with shares racing higher. 

Or you bemoan the fate of a painful loss with shares tumbling down 10-20% or more. 

Investors have long sought a trusted “earnings whisper” to better predict how things will turn out BEFORE it's too late. 

Gladly the Zen Ratings proves to be an excellent earnings whisperer leading to more beats and less misses. And now is the perfect time to understand how this works to review your stocks before it’s too late. 

At the simplest level we can say that the most fundamentally sound companies are more likely to beat earnings.

This is good news given the complete 115 fundamental factor analysis the Zen Ratings does on every stock, which helps explain this consistent outperformance:

There is simply no way that you can have this level of outperformance going back to 2003 without being successful during earnings season. 

Obviously not all 115 factors are equally beneficial in providing the necessary earnings whisper. 

Digging into the specifics, we find that the 22 factors associated with our Growth component rating are the best at locking in on companies likely to beat earnings. 

Too much of the conversation on growth is about the pace of earnings growth in the future. Indeed we all are more attracted to stocks likely to grow earnings 30% a year versus something more tame like 5%. 

But academic studies show that those high growth companies are actually the riskiest as it is nearly impossible to keep up that torrid growth pace in the future. Once things slow down the PE contracts as the share price implodes. 

The REAL key to earnings beats is to find a company that is consistently growing. 

That is the focus of our Growth ratings. 

Not just earnings growth, but also consistent growth in: 

• Revenue
• Cash Flow
• Profit Margins
• EBITDA

The more consistently this growth happened in the past…and across multiple growth measures…the more likely it continues in the future. 

And the more likely you wake up the morning of their next earnings report to find another beat and raise on your hands with shares flying higher. 

This behooves every investor to make sure that their stocks stack up on this vital Growth component of the Zen Rating. 

What to Do Next? 

1) Review all of your stocks to make sure they make the grade with the Zen Ratings. 

Not just A and B rated overall, but how they stack up for the Growth component as we enter earnings season. A and B is preferred. But C is OK. It’s the D’s and F’s we need to avoid. 

Just go to WallStreetZen.com and use the search box to review your stocks 1 by 1. Start here >

2) STRONGLY consider selling those stocks that don’t measure up. That’s because history shows poor ratings = poor performance. 

In this regard, a low Growth rating (D or F) increases the odds of waking up in the near future to some painful earnings misses with shares tumbling lower. 

3) Find better stocks. Continue your search of stock tickers on WallStreetZen.com to add more with the best Zen Ratings. And yes, those with A & B for Growth to increase the odds of earnings beats on the way. 

Note that today there are 921 A & B overall rated stocks. 432 of them are also A & B for Growth. 

For those who want to simplify this stock research process, you may want to just skip to step 4 below…

4) Discover my Zen Investor portfolio where I hand pick the best stocks based on their Zen Ratings and my 44 years of investing experience. 

Currently there are 16 top Zen Rated stocks in my portfolio which is likely a better starting point for your exploration. 

Gladly we are well ahead of the market to start the new year and expect to keep increasing that lead in the months ahead.  

Discover the Zen Investor & My Top 16 Stocks Now > 

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor-in-Chief of WallStreetZen

Want to get in touch? Email us at news@wallstreetzen.com.