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 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.
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Meta Platforms (META) earns a Zacks Rank #2 right now and its Most Accurate Estimate sits at $5.01 a share, just 22 days from its upcoming earnings release on February 1, 2024.
META has an Earnings ESP figure of 4.58%, which, as explained above, is calculated by taking the percentage difference between the $5.01 Most Accurate Estimate and the Zacks Consensus Estimate of $4.79.
META is just one of a large group of Computer and Technology stocks with a positive ESP figure. ASML (ASML) is another qualifying stock you may want to consider.
Slated to report earnings on January 24, 2024, ASML holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $5.26 a share 14 days from its next quarterly update.
ASML's Earnings ESP figure currently stands at 3.46% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $5.08.
Because both stocks hold a positive Earnings ESP, META and ASML 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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