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.
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.
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. SVB Financial (SIVB) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $8.03 a share 30 days away from its upcoming earnings release on July 28, 2022.
SIVB has an Earnings ESP figure of 2.19%, which, as explained above, is calculated by taking the percentage difference between the $8.03 Most Accurate Estimate and the Zacks Consensus Estimate of $7.86.
SIVB is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Host Hotels (HST).
Host Hotels, which is readying to report earnings on August 3, 2022, sits at a Zacks Rank #1 (Strong Buy) right now. It's Most Accurate Estimate is currently $0.49 a share, and HST is 36 days out from its next earnings report.
The Zacks Consensus Estimate for Host Hotels is $0.48, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 3.56%.
Because both stocks hold a positive Earnings ESP, SIVB and HST 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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SVB Financial Group (SIVB) : Free Stock Analysis Report
Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report
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