Yahoo Finance These 2 Finance Stocks Could Beat Earnings: Why They Should Be on Your Radar
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, 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. Arch Capital Group (ACGL) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $1.42 a share, just six days from its upcoming earnings release on February 13, 2023.
By taking the percentage difference between the $1.42 Most Accurate Estimate and the $1.34 Zacks Consensus Estimate, Arch Capital Group has an Earnings ESP of 6.17%.
ACGL is just one of a large group of Finance stocks with a positive ESP figure. Capital Southwest (CSWC) is another qualifying stock you may want to consider.
Capital Southwest, which is readying to report earnings on May 22, 2023, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.61 a share, and CSWC is 104 days out from its next earnings report.
For Capital Southwest, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.61 is 0.28%.
ACGL and CSWC'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 >>
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Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
Capital Southwest Corporation (CSWC) : Free Stock Analysis Report
