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.
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.
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.
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. Enterprise Products Partners (EPD) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.63 a share, just 16 days from its upcoming earnings release on February 1, 2023.
EPD has an Earnings ESP figure of 4.13%, which, as explained above, is calculated by taking the percentage difference between the $0.63 Most Accurate Estimate and the Zacks Consensus Estimate of $0.61.
EPD is just one of a large group of Oils-Energy stocks with a positive ESP figure. Exxon Mobil (XOM) is another qualifying stock you may want to consider.
Exxon Mobil, which is readying to report earnings on February 7, 2023, sits at a Zacks Rank #3 (Hold) right now. It’s Most Accurate Estimate is currently $3.27 a share, and XOM is 22 days out from its next earnings report.
The Zacks Consensus Estimate for Exxon Mobil is $3.14, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 3.98%.
EPD and XOM’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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