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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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 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. Roper Technologies (ROP) earns a Zacks Rank #3 30 days from its next quarterly earnings release on January 29, 2025, and its Most Accurate Estimate comes in at $4.93 a share.
Roper Technologies' Earnings ESP sits at 3.61%, which, as explained above, is calculated by taking the percentage difference between the $4.93 Most Accurate Estimate and the Zacks Consensus Estimate of $4.76.
ROP 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 SentinelOne (S) as well.
SentinelOne, which is readying to report earnings on March 12, 2025, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.01 a share, and S is 72 days out from its next earnings report.
For SentinelOne, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.01 is 9.09%.
Because both stocks hold a positive Earnings ESP, ROP and S 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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