On the other hand, earnings estimate revisions are at the core of the Zacks Rank. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide. It is displayed in whole numbers - 1 to 5.Īnalysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions. The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28). Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.ĪBR Should Not Be Confused With Zacks RankĪlthough both Zacks Rank and ABR are displayed in a range of 1-5, they are different measures altogether. Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement. In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.ĭo you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. Discovery, it may not be wise to make an investment decision solely based on this information. While the ABR calls for buying Warner Bros. Strong Buy and Buy respectively account for 61.1% and 5.6% of all recommendations.Ĭheck price target & stock forecast for Warner Bros.
Of the 18 recommendations that derive the current ABR, 11 are Strong Buy and one is Buy. An ABR of 1.72 approximates between Strong Buy and Buy.
Discovery currently has an average brokerage recommendation (ABR) of 1.72, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 18 brokerage firms.
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