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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.
The final step today is to look at a stock that meets our ESP qualifications. Chewy (CHWY) earns a Zacks Rank #3 12 days from its next quarterly earnings release on December 4, 2024, and its Most Accurate Estimate comes in at $0.24 a share.
By taking the percentage difference between the $0.24 Most Accurate Estimate and the $0.23 Zacks Consensus Estimate, Chewy has an Earnings ESP of 3.23%.
CHWY is part of a big group of Retail-Wholesale stocks that boast a positive ESP, and investors may want to take a look at Cracker Barrel Old Country Store (CBRL) as well.
Cracker Barrel Old Country Store is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on February 25, 2025. CBRL's Most Accurate Estimate sits at $1.09 a share 95 days from its next earnings release.
The Zacks Consensus Estimate for Cracker Barrel Old Country Store is $1.03, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 5.83%.
CHWY and CBRL'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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