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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information. With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure.
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. NetApp (NTAP) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $1.33 a share, just two days from its upcoming earnings release on February 22, 2023.
NTAP has an Earnings ESP figure of 0.82%, which, as explained above, is calculated by taking the percentage difference between the $1.33 Most Accurate Estimate and the Zacks Consensus Estimate of $1.31.
NTAP is just one of a large group of Computer and Technology stocks with a positive ESP figure. Intuit (INTU) is another qualifying stock you may want to consider.
Slated to report earnings on February 23, 2023, Intuit holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.44 a share three days from its next quarterly update.
Intuit's Earnings ESP figure currently stands at 0.42% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.43.
Because both stocks hold a positive Earnings ESP, NTAP and INTU 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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