Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
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.
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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.
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. BJ's Restaurants (BJRI) earns a Zacks Rank #1 right now and its Most Accurate Estimate sits at $0.05 a share, just 30 days from its upcoming earnings release on October 19, 2023.
By taking the percentage difference between the $0.05 Most Accurate Estimate and the $0.02 Zacks Consensus Estimate, BJ's Restaurants has an Earnings ESP of 133.33%.
BJRI is one of just a large database of Retail-Wholesale stocks with positive ESPs. Another solid-looking stock is GameStop (GME).
GameStop, which is readying to report earnings on December 6, 2023, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently -$0.10 a share, and GME is 78 days out from its next earnings report.
For GameStop, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.12 is 22.97%.
Because both stocks hold a positive Earnings ESP, BJRI and GME 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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