Zacks Premium Review – Are the Paid Stock Research Tools Worth It?

About Zacks Premium

Zacks Investment Research is a stock and financial research platform used widely by traders. While many traders are familiar with Zacks’ extensive free research tools – which include stock news and research articles written by analysts as well as stock and mutual fund screeners – Zacks also offers a Premium subscription service for traders who want to go deeper into analyst predictions.

Zacks Premium holds its own for traders looking for new ideas with top stock picks from analysts, analysis of potential earnings surprises, and more detailed stock filters and lists. The #1 Rank List of recommended stocks boasts a strong historical return, while pre-defined stock filters that separate value, growth, and momentum stocks provide actionable information for a variety of traders.

We reviewed ZacksTrade a while back, and now we’ve decided to take a closer look at Zacks’ premium research services. Are these services worth paying for? Keep reading our Zacks Premium review to find out.

Zacks Premium Pricing

A Zacks Premium subscription starts with a 30-day free trial, after which it costs $249 per year.

If you do not like the service after 30 days, you can cancel without being charged. There is also a money-back guarantee if you choose to pay for the service. If you are unhappy with the service within 90 days of your payment, you may request a full refund.

The Zacks Premium cost itself is in line with other similar services like Motley Fool and Gorilla Trades, and the money-back guarantee offers peace of mind.

Zacks Premium Features

Zacks services are created for investors who are looking for stock analysis reports and investment ideas. Let’s take a look at some of the key features.

Zacks Rank Lists

As part of our Zacks Premium review, we were looking forward to checking out the Zacks Rank system. Zacks ranks will be the most useful feature of Zacks Premium for the vast majority of traders. The rank lists are essentially lists of stocks that Zacks analysts have identified as the best stocks to invest in. This is similar to the IBD 100 list offered in IBD’s Leaderboard and Marketsmith services. It’s an excellent tool for self-directed investors who want a starting point for their own research (vs. buy/sell alerts), and the investment ideas lists are far more comprehensive than ones we’ve seen in other platforms like Action Alerts Plus.

The #1 Zacks Rank List is the most frequently used list.  It covers stocks that Zacks analysts consider “strong buys.” Overall, the performance of stocks on this list has been historically solid – Zacks data indicates that the #1 Rank picks have yielded an average 25% return each year. However, there are specific years where the picks have significantly underperformed the market.

The #1 Rank List is updated with upwards of 20 new stocks each day. That volume of stock recommendations is both good and bad, though, since it means that traders need to do quite a bit of research into multiple stocks each day to choose when and in which stocks to invest. In addition, there is a list displaying which stocks were added or removed from the #1 Rank List on any given day.

Helpfully, though, the Zacks #1 Rank List can be sorted by analysts’ categorization of stocks as “value,” “growth,” “momentum,” and “income.” It’s also easy to sort the stock list according to multiple parameters, including fundamentals like P/E as well as recent movements in stock prices. Finally, the list data can be exported to Excel with just a single button to give you the ability to create customized filters.

While Zacks does have #2, #3, and #4 rank lists – corresponding to “weak buy,” “neutral,” and “weak sell” ratings – these are relatively difficult to find on the site. The #5 Rank List, which displays stocks recommended for shorting, is easy to access. However, beware that the historical performance of this recommendation list is mixed at best – it has an average annual return of just 2% per year and has lost more than 50% of its value in some years. The #5 Rank List lacks most of the sorting and category ratings that you’ll find in the more popular #1 Rank List.

Zacks Style Scores

As a Premium member, you get access to the “style scores” that Zacks assigns to every stock its analysts review. These style scores rank each stock’s value, growth, and momentum on a scale of A-F.

Zacks style scores are primarily helpful in two places: the #1 Rank List and the Zacks stock screener. In the #1 Rank List, as discussed above, you can sort the list according to whether stocks are rated as an A for value, growth, or momentum. In the stock screener, Premium subscribers can use value, growth, and momentum ratings as additional filters in screens.

These investment style scores can help you tailor your results to your personal investment strategy.

However, keep in mind that the investment style scores are highly subjective and based on Zacks’ in-house algorithm. These style scores should be taken with a grain of salt, and more advanced traders will likely find them of mixed usefulness at best.

Zacks Research Reports

Premium subscribers also get access to equity research reports written by Zacks analysts. These research reports offer a several-page write-up about a stock, taking into account management, company initiatives, and trends in revenue, earnings, and more. These equity research reports can be hugely valuable for investors who want to do a deep dive into a stock before making an investment.

Earnings Expected Surprise Prediction Filter

One of the most unique aspects of Zacks Premium is its focus on earnings estimate revisions. The Earnings Expected Surprise Prediction (ESP) Filter shows specific stocks that Zacks analysts think will beat Wall Street expectations for their upcoming earnings reports. This is in part based on earnings estimate revisions by Wall Street firms, but is also based on proprietary research by Zacks. The ESP filter is surprisingly accurate – Zacks claims a 70% success rate – but it should be considered a relatively aggressive trading tool.

The filter does have some useful tools for short-term traders. You can filter stocks in the ESP list according to how many days away the earnings release is, the expected earnings surprise percentage, and the Zacks ranking of the stock. Note that there is a similar ESP filter for stocks that Zacks analysts believe will fall short of Wall Street earnings estimates.

Premium Screens

The final major addition that Premium subscribers get to the Zacks platform is access to a suite of pre-defined premium stock screens. These screens are focused on either value, growth, or momentum stocks, but there are also a variety of screens for income stocks and stocks on the #1 or #5 Rank Lists.

While most of these screens could be recreated manually in the stock screener (with a Premium membership to get access to style scores), the pre-made screens are very specific and useful. While many traders may work from the #1 Rank List, there is a good argument to be made that the premium screens are the more useful tool for finding new trade ideas. Plus, since these screens are centered on different styles of stocks, they can cater to a wide variety of traders.

These screens are unique in that they incorporate proprietary data.

Unfortunately, you can’t directly edit each premium screen – but Zacks does provide you with the filters used so you can recreate it and modify it manually in the stock screener. Also, while Zacks offers the ability to run a backtest on the premium screens, this requires an additional subscription to the company’s Research Wizard software, which is separate from Zacks Premium.

Platform Differentiators

Zacks Premium has a few modules that set it apart from the stock research and stock picking competition. Most notably, the Earnings ESP Filter is unique to Zacks Premium and can be a very valuable tool for aggressive short-term traders.

For long-term traders and less experienced traders, the style scores can be very informative compared to other stock research platforms. But the real power of the style scores is in the premium screens, which are pre-defined to make it easy to get new, actionable trade ideas for a specific style of stock. 

While the majority of the Zacks Premium platform is built around the #1 Rank List, this is one of its least unique offerings. It is essentially a stock recommendation tool similar to Stansberry Research or Action Alerts Plus, and the sheer number of stocks added each day makes it harder to use than those systems.

Below are some in-depth comparisons of Zacks and competing services:

• Zacks vs. Motley Fool
• Zacks vs. Seeking Alpha
• Zacks vs. Morningstar
• Zacks vs. IBD
• Zacks vs. Vectorvest
• Zacks vs. TipRanks

What Type of Trader is Zacks Premium Best for?

Zacks Premium can cater to both medium and long-term traders, but it is generally geared towards traders who need help with market research and who can benefit from stock ideas offered by expert analysts. At the end of the day, Zacks is an investment research platform that is intended for self-directed investors who want access to research reports and other research tools.

Zacks Investment Research should not be confused with a stock picking service like Motley Fool Stock Advisor. While Zacks Research can be used to pick stocks, it requires in-depth research on the investor’s behalf as well. While stock picking companies will tell you exactly which stocks to buy and when, Zacks simply provides the research reports and research tools you need to make smarter investing decisions on your own. This can be viewed as a positive by self-directed investors who value research tools over direct stock recommendations.

If you like spending hours discovering new stocks and doing in-depth research on different companies, Zacks offers a great suite of research tools. In fact, the fundamental research tools are some of the best in the industry.

Short-term traders can also benefit from Zacks Premium thanks to the momentum filters and Earnings ESP Filter. The ESP filter, in particular, makes it easy for short-term traders to find stocks that could experience large swings within the coming week following earnings reports.

Is Zacks Premium Worth It?

Before considering paying for Zacks Premium, make sure you are familiar with the free version of the service first. You can find a lot of great analyses of stocks and mutual funds by simply using the free version of the service. If you find that you like the investment tools in the free version of the service, you may consider upgrading.

For many current Zacks users who rely on the platform’s research and recommendations, the biggest question may be whether upgrading to a Zacks Premium membership is worth the money. Ultimately, it depends on what you need out of a stock recommendation platform – but the style scores, premium screens, and Earnings ESP filters are all highly actionable tools that add value. If you plan to use these tools for medium-term trading, they can easily pay for the $249 annual subscription fee. However, keep in mind that you can recreate the premium screens to some extent – sans style scores – with a free account. In addition, Zacks makes public at least one pick from the #1 Rank List each day.

You may also consider other stock-picking services like Motley Fool’s Stock Advisor, which is cheaper and provides a similar offering. You can read our Motley Fool vs. Zacks guide here.

Pros

• Access to Zacks #1 Rank List (“strong buy” recommended stocks)
• Value, growth, and momentum scores assigned to every recommended stock
• Actionable pre-defined screens
• Earnings Expected Surprise Prediction Filter is useful for short-term trades
• Overall strong historical performance from #1 Rank List and ESP filter

Cons

• #2 through #5 rank lists are relatively unhelpful
• #1 Rank List receives dozens of additional stocks each day