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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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 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. Parker-Hannifin (PH) 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 $6.84 a share.
Parker-Hannifin's Earnings ESP sits at 1.74%, which, as explained above, is calculated by taking the percentage difference between the $6.84 Most Accurate Estimate and the Zacks Consensus Estimate of $6.73.
PH is one of just a large database of Industrial Products stocks with positive ESPs. Another solid-looking stock is Plug Power (PLUG).
Plug Power is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 8, 2025. PLUG's Most Accurate Estimate sits at -$0.20 a share 36 days from its next earnings release.
The Zacks Consensus Estimate for Plug Power is -$0.20, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.22%.
PH and PLUG'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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Parker-Hannifin Corporation (PH) : Free Stock Analysis Report