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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.
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 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.
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. Humana (HUM) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $10.01 a share, just 30 days from its upcoming earnings release on April 23, 2025.
HUM has an Earnings ESP figure of 0.53%, which, as explained above, is calculated by taking the percentage difference between the $10.01 Most Accurate Estimate and the Zacks Consensus Estimate of $9.95.
HUM is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is Astrazeneca (AZN).
Astrazeneca is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 24, 2025. AZN's Most Accurate Estimate sits at $1.14 a share 31 days from its next earnings release.
The Zacks Consensus Estimate for Astrazeneca is $1.10, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 4.02%.
Because both stocks hold a positive Earnings ESP, HUM and AZN could potentially post earnings beats in their next reports.
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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