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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.
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.
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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. Clorox (CLX) earns a Zacks Rank #3 26 days from its next quarterly earnings release on April 29, 2025, and its Most Accurate Estimate comes in at $1.61 a share.
By taking the percentage difference between the $1.61 Most Accurate Estimate and the $1.59 Zacks Consensus Estimate, Clorox has an Earnings ESP of 1.37%.
CLX is part of a big group of Consumer Staples stocks that boast a positive ESP, and investors may want to take a look at Freshpet (FRPT) as well.
Freshpet is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 5, 2025. FRPT's Most Accurate Estimate sits at $0.19 a share 32 days from its next earnings release.
For Freshpet, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.18 is 7.12%.
CLX and FRPT's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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The Clorox Company (CLX) : Free Stock Analysis Report
Freshpet, Inc. (FRPT) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).