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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.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information. With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the 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. Tenet Healthcare (THC) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $3.17 a share, just 27 days from its upcoming earnings release on April 29, 2025.
Tenet Healthcare's Earnings ESP sits at 1.68%, which, as explained above, is calculated by taking the percentage difference between the $3.17 Most Accurate Estimate and the Zacks Consensus Estimate of $3.12.
THC is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Abbott (ABT) as well.
Abbott, which is readying to report earnings on April 16, 2025, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $1.07 a share, and ABT is 14 days out from its next earnings report.
For Abbott, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.07 is 0.21%.
THC and ABT'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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