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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, 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 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. Pan American Silver (PAAS) holds a Zacks Rank #2 at the moment and its Most Accurate Estimate comes in at $0.39 a share 30 days away from its upcoming earnings release on February 19, 2025.
By taking the percentage difference between the $0.39 Most Accurate Estimate and the $0.36 Zacks Consensus Estimate, Pan American Silver has an Earnings ESP of 7.8%.
PAAS is just one of a large group of Basic Materials stocks with a positive ESP figure. Allegheny Technologies (ATI) is another qualifying stock you may want to consider.
Slated to report earnings on February 4, 2025, Allegheny Technologies holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.62 a share 15 days from its next quarterly update.
Allegheny Technologies' Earnings ESP figure currently stands at 3.91% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.60.
Because both stocks hold a positive Earnings ESP, PAAS and ATI 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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