In This Article:
Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
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 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. Applied Materials (AMAT) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $2.35 a share, just 22 days from its upcoming earnings release on May 15, 2025.
By taking the percentage difference between the $2.35 Most Accurate Estimate and the $2.31 Zacks Consensus Estimate, Applied Materials has an Earnings ESP of 1.94%.
AMAT is part of a big group of Computer and Technology stocks that boast a positive ESP, and investors may want to take a look at Alphabet (GOOGL) as well.
Alphabet is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 24, 2025. GOOGL's Most Accurate Estimate sits at $2.03 a share one day from its next earnings release.
Alphabet's Earnings ESP figure currently stands at 0.51% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.02.
AMAT and GOOGL'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