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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.
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, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.
The final step today is to look at a stock that meets our ESP qualifications. Amazon (AMZN) earns a Zacks Rank #1 27 days from its next quarterly earnings release on February 6, 2025, and its Most Accurate Estimate comes in at $1.74 a share.
By taking the percentage difference between the $1.74 Most Accurate Estimate and the $1.53 Zacks Consensus Estimate, Amazon has an Earnings ESP of 13.45%.
AMZN is just one of a large group of Retail-Wholesale stocks with a positive ESP figure. Texas Roadhouse (TXRH) is another qualifying stock you may want to consider.
Slated to report earnings on February 20, 2025, Texas Roadhouse holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.67 a share 41 days from its next quarterly update.
For Texas Roadhouse, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.66 is 0.39%.
Because both stocks hold a positive Earnings ESP, AMZN and TXRH 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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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Texas Roadhouse, Inc. (TXRH) : Free Stock Analysis Report