What Is Zacks Investment Research?
Zacks Investment Research is a reputable American company dedicated to providing independent research and investment-related content. Founded in 1978 by Len Zacks, an insightful Ph.D. scholar from MIT, the company’s mission is to empower professional investors with valuable financial data and analysis to facilitate informed decision-making for both proprietary and client investment accounts.
Known for its renowned consensus earnings-per-share (EPS) estimates, Zacks offers a wide range of services including research reports, stock recommendations, price data, funds analysis, charts, and various other investment tools and data.
### Key Takeaways
– Zacks Investment Research focuses on independent research and investment-related content.
– Founded in 1978 by Len Zacks, based on his insightful research while studying at MIT.
– Zacks Research emphasizes earnings estimate revisions, which play a significant role in impacting stock prices.
– The company is best known for its “Zacks Ranks,” providing stock ratings on a scale of one to five with a #1 rank signifying a “Strong Buy.”
– Zacks has expanded its ratings to cover mutual funds and ETFs as well.
Understanding Zacks Investment Research
Utilizing a quantitative stock-rating system devoid of personal biases, Zacks leverages mathematical analysis to assess investment opportunities. Their approach heavily relies on metrics like earnings per share (EPS) revisions to evaluate a company’s projected earnings.
Zacks aggregates research from 185 brokerage firms on over 8,500 North American publicly traded companies daily. By amalgamating expert opinions, the company derives consensus on stock earnings potential.
Zacks Ranks
Zacks Ranks categorize equity products into five groups from “Strong Buy” to “Strong Sell” based on consolidated brokerage assessments. “Strong Buy” stocks have historically outperformed, generating superior returns.
Zacks uses four criteria to evaluate earnings potential: Agreement, Magnitude, Upside, and Surprise. These rankings align with Len Zacks’ belief in the impact of earnings estimate revisions on stock prices.
When earnings estimates increase, institutional investors often adjust their positions, leading to stock price appreciation. Individual investors can leverage these revisions for potential gains.
Zacks Ranks ranks stocks from one to five, with a #1 rank indicating a “Strong Buy.”
Zacks vs. Morningstar
In comparison to Morningstar Inc., Zacks Investment Research emphasizes quantitative analysis, while Morningstar focuses more on fundamental analysis. Both companies offer varied free and paid products tailored to investors’ needs.
Morningstar employs a proprietary formula based on historical performance to rate funds, contrasting Zacks’ quantitative approach. Each company provides unique insights into funds and stocks, catering to different investment strategies.
Example of Zacks Investment Research
Zacks showcases successful predictions like LSB Industries (LSX) to demonstrate the effectiveness of their model. An LSX “Strong Buy” rating in 2012 led to substantial gains compared to the market index, showcasing the potential benefits of using Zacks Research.
By leveraging earnings estimate revisions, Zacks Research aids investors in identifying promising opportunities that may outperform the market, as seen in the case of LSX.
The Bottom Line
Zacks Investment Research offers a quantitative-driven approach that highlights the importance of earnings estimate revisions in identifying strong investment prospects. Their data-driven insights provide a valuable resource for investors seeking to enhance their investment decisions.
What Is Zacks Stock Screener?
The Zacks Stock Screener, a subscription-based service, enables investors to filter and search for stocks based on specific metrics like price changes, dividends, and earnings per share revisions.
How Much Does Zacks Stock Screener Cost?
Zacks Premium Screens are accessible through a premium membership priced at $249 annually, with higher-tier options available for enhanced features at varying price points.
What Is the Zacks Industry Rank?
The Zacks Industry Rank represents the average Zacks Rank within a specific industry sector, aiding investors in identifying favorable industry conditions that could benefit related companies.
What Is the Zacks Mutual Fund Rank?
The Zacks Mutual Fund Rank assigns ratings to mutual funds, aligning with Zacks Ranks for stocks. Calculated quarterly by the Zacks Quantitative Research Department, this rating considers various factors to evaluate mutual fund performance.
What Is the Zacks ETF Rank?
The Zacks ETF Rank offers insights into exchange-traded funds with a positive one-year outlook, utilizing quantitative metrics such as expense ratio, momentum, and asset composition to assess each ETF.