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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.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive 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 last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. Expedia (EXPE) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $2.11 a share 13 days away from its upcoming earnings release on February 6, 2025.
EXPE has an Earnings ESP figure of 2.12%, which, as explained above, is calculated by taking the percentage difference between the $2.11 Most Accurate Estimate and the Zacks Consensus Estimate of $2.07.
EXPE is part of a big group of Retail-Wholesale stocks that boast a positive ESP, and investors may want to take a look at Match Group (MTCH) as well.
Slated to report earnings on February 4, 2025, Match Group holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.85 a share 11 days from its next quarterly update.
Match Group's Earnings ESP figure currently stands at 1.2% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.84.
Because both stocks hold a positive Earnings ESP, EXPE and MTCH 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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