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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. Northrop Grumman (NOC) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $6.36 a share, just six days from its upcoming earnings release on January 30, 2025.
NOC has an Earnings ESP figure of 1.37%, which, as explained above, is calculated by taking the percentage difference between the $6.36 Most Accurate Estimate and the Zacks Consensus Estimate of $6.27.
NOC is just one of a large group of Aerospace stocks with a positive ESP figure. Lockheed Martin (LMT) is another qualifying stock you may want to consider.
Lockheed Martin, which is readying to report earnings on January 28, 2025, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $6.65 a share, and LMT is four days out from its next earnings report.
The Zacks Consensus Estimate for Lockheed Martin is $6.60, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.66%.
Because both stocks hold a positive Earnings ESP, NOC and LMT 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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