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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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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.
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. Simon Property (SPG) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $2.96 a share 27 days away from its upcoming earnings release on May 5, 2025.
Simon Property's Earnings ESP sits at 1.95%, which, as explained above, is calculated by taking the percentage difference between the $2.96 Most Accurate Estimate and the Zacks Consensus Estimate of $2.90.
SPG is part of a big group of Finance stocks that boast a positive ESP, and investors may want to take a look at Chubb (CB) as well.
Slated to report earnings on April 22, 2025, Chubb holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $3.27 a share 14 days from its next quarterly update.
For Chubb, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.26 is 0.3%.
SPG and CB'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 >>
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