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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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 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.
The final step today is to look at a stock that meets our ESP qualifications. Pebblebrook Hotel (PEB) earns a Zacks Rank #3 29 days from its next quarterly earnings release on May 1, 2025, and its Most Accurate Estimate comes in at $0.14 a share.
By taking the percentage difference between the $0.14 Most Accurate Estimate and the $0.13 Zacks Consensus Estimate, Pebblebrook Hotel has an Earnings ESP of 4.48%.
PEB is part of a big group of Finance stocks that boast a positive ESP, and investors may want to take a look at Palomar (PLMR) as well.
Palomar, which is readying to report earnings on May 1, 2025, sits at a Zacks Rank #1 (Strong Buy) right now. It's Most Accurate Estimate is currently $1.66 a share, and PLMR is 29 days out from its next earnings report.
Palomar's Earnings ESP figure currently stands at 3.43% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.61.
PEB and PLMR's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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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