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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.
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 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.
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. Walmart (WMT) holds a Zacks Rank #2 at the moment and its Most Accurate Estimate comes in at $0.66 a share seven days away from its upcoming earnings release on February 20, 2025.
Walmart's Earnings ESP sits at 1.75%, which, as explained above, is calculated by taking the percentage difference between the $0.66 Most Accurate Estimate and the Zacks Consensus Estimate of $0.64.
WMT is one of just a large database of Retail-Wholesale stocks with positive ESPs. Another solid-looking stock is Expedia (EXPE).
Expedia is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on May 1, 2025. EXPE's Most Accurate Estimate sits at $0.49 a share 77 days from its next earnings release.
For Expedia, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.43 is 12.31%.
WMT and EXPE'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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Walmart Inc. (WMT) : Free Stock Analysis Report
Expedia Group, Inc. (EXPE) : Free Stock Analysis Report