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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
The earnings figure itself is key, 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 even higher.
2 Stocks to Add to Your Watchlist
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. 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.
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. Booz Allen Hamilton (BAH) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $1.68 a share, just 28 days from its upcoming earnings release on May 23, 2025.
Booz Allen Hamilton's Earnings ESP sits at 5.74%, which, as explained above, is calculated by taking the percentage difference between the $1.68 Most Accurate Estimate and the Zacks Consensus Estimate of $1.59.
BAH is just one of a large group of Business Services stocks with a positive ESP figure. Fidelity National Information Services (FIS) is another qualifying stock you may want to consider.
Slated to report earnings on May 6, 2025, Fidelity National Information Services holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.21 a share 11 days from its next quarterly update.
Fidelity National Information Services' Earnings ESP figure currently stands at 0.88% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.20.
BAH and FIS' positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
Find Stocks to Buy or Sell Before They're Reported
Use 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 >>