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.
The final step today is to look at a stock that meets our ESP qualifications. Teradyne (TER) earns a Zacks Rank #3 26 days from its next quarterly earnings release on October 25, 2022, and its Most Accurate Estimate comes in at $1.04 a share.
Teradyne's Earnings ESP sits at 0.58%, which, as explained above, is calculated by taking the percentage difference between the $1.04 Most Accurate Estimate and the Zacks Consensus Estimate of $1.03.
TER 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 Cadence Design Systems (CDNS) as well.
Cadence Design Systems is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on October 24, 2022. CDNS' Most Accurate Estimate sits at $0.97 a share 25 days from its next earnings release.
Cadence Design Systems' Earnings ESP figure currently stands at 0.41% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.97.
Because both stocks hold a positive Earnings ESP, TER and CDNS 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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Teradyne, Inc. (TER) : Free Stock Analysis Report
Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report
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