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 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. Williams Companies, Inc. The (WMB) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $0.57 a share 28 days away from its upcoming earnings release on February 20, 2023.
Williams Companies, Inc. The’s Earnings ESP sits at 19.75%, which, as explained above, is calculated by taking the percentage difference between the $0.57 Most Accurate Estimate and the Zacks Consensus Estimate of $0.48.
WMB is part of a big group of Oils-Energy stocks that boast a positive ESP, and investors may want to take a look at Sunrun (RUN) as well.
Sunrun is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on February 16, 2023. RUN’s Most Accurate Estimate sits at $0.17 a share 24 days from its next earnings release.
For Sunrun, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.03 is 711.11%.
WMB and RUN’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 >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report