In This Article:
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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 is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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. Coca-Cola (KO) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.52 a share, just 18 days from its upcoming earnings release on February 11, 2025.
By taking the percentage difference between the $0.52 Most Accurate Estimate and the $0.51 Zacks Consensus Estimate, Coca-Cola has an Earnings ESP of 0.5%.
KO is part of a big group of Consumer Staples stocks that boast a positive ESP, and investors may want to take a look at Estee Lauder (EL) as well.
Estee Lauder, which is readying to report earnings on February 4, 2025, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.32 a share, and EL is 11 days out from its next earnings report.
For Estee Lauder, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.32 is 0.85%.
Because both stocks hold a positive Earnings ESP, KO and EL could potentially post earnings beats in their next reports.
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
CocaCola Company (The) (KO) : Free Stock Analysis Report
The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report