In This Article:
Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
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. Royal Caribbean (RCL) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $2.54 a share, just 15 days from its upcoming earnings release on April 29, 2025.
Royal Caribbean's Earnings ESP sits at 0.6%, which, as explained above, is calculated by taking the percentage difference between the $2.54 Most Accurate Estimate and the Zacks Consensus Estimate of $2.52.
RCL is one of just a large database of Consumer Discretionary stocks with positive ESPs. Another solid-looking stock is MGM Resorts (MGM).
Slated to report earnings on April 30, 2025, MGM Resorts holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.62 a share 16 days from its next quarterly update.
For MGM Resorts, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.54 is 14.16%.
RCL and MGM's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report