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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 final step today is to look at a stock that meets our ESP qualifications. EnerSys (ENS) earns a Zacks Rank #2 20 days from its next quarterly earnings release on February 5, 2025, and its Most Accurate Estimate comes in at $3.05 a share.
By taking the percentage difference between the $3.05 Most Accurate Estimate and the $2.63 Zacks Consensus Estimate, EnerSys has an Earnings ESP of 15.67%.
ENS is one of just a large database of Industrial Products stocks with positive ESPs. Another solid-looking stock is RBC Bearings (RBC).
Slated to report earnings on February 13, 2025, RBC Bearings holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $2.20 a share 28 days from its next quarterly update.
The Zacks Consensus Estimate for RBC Bearings is $2.20, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.11%.
Because both stocks hold a positive Earnings ESP, ENS and RBC 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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Enersys (ENS) : Free Stock Analysis Report
RBC Bearings Incorporated (RBC) : Free Stock Analysis Report