Two factors often determine stock prices in the long run: earnings and interest rates. Investors can’t control the latter, but they can focus on a company’s earnings results every quarter.
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. Diamondback Energy (FANG) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $4.34 a share 12 days away from its upcoming earnings release on April 30, 2024.
FANG has an Earnings ESP figure of 1.26%, which, as explained above, is calculated by taking the percentage difference between the $4.34 Most Accurate Estimate and the Zacks Consensus Estimate of $4.28.
FANG is just one of a large group of Oils-Energy stocks with a positive ESP figure. Schlumberger (SLB) is another qualifying stock you may want to consider.
Schlumberger, which is readying to report earnings on April 19, 2024, sits at a Zacks Rank #3 (Hold) right now. It’s Most Accurate Estimate is currently $0.75 a share, and SLB is one day out from its next earnings report.
Schlumberger’s Earnings ESP figure currently stands at 0.67% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.74.
FANG and SLB’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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Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
Schlumberger Limited (SLB) : Free Stock Analysis Report