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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information. With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure.
The final step today is to look at a stock that meets our ESP qualifications. Fortinet (FTNT) earns a Zacks Rank #3 13 days from its next quarterly earnings release on May 7, 2025, and its Most Accurate Estimate comes in at $0.55 a share.
FTNT has an Earnings ESP figure of 3.77%, which, as explained above, is calculated by taking the percentage difference between the $0.55 Most Accurate Estimate and the Zacks Consensus Estimate of $0.53.
FTNT is part of a big group of Computer and Technology stocks that boast a positive ESP, and investors may want to take a look at Cisco Systems (CSCO) as well.
Cisco Systems is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 21, 2025. CSCO's Most Accurate Estimate sits at $0.92 a share 27 days from its next earnings release.
For Cisco Systems, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.91 is 0.82%.
FTNT and CSCO'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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