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 Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.
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. Pinterest (PINS) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.02 a share, just two days from its upcoming earnings release on April 27, 2023.
PINS has an Earnings ESP figure of 600.01%, which, as explained above, is calculated by taking the percentage difference between the $0.02 Most Accurate Estimate and the Zacks Consensus Estimate of $0.
PINS is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Skyworks Solutions (SWKS).
Skyworks Solutions, which is readying to report earnings on May 8, 2023, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $2.02 a share, and SWKS is 13 days out from its next earnings report.
The Zacks Consensus Estimate for Skyworks Solutions is $2.02, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.15%.
PINS and SWKS' 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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