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 final step today is to look at a stock that meets our ESP qualifications. Centene (CNC) earns a Zacks Rank #3 27 days from its next quarterly earnings release on July 26, 2022, and its Most Accurate Estimate comes in at $1.71 a share.
Centene's Earnings ESP sits at 1.42%, which, as explained above, is calculated by taking the percentage difference between the $1.71 Most Accurate Estimate and the Zacks Consensus Estimate of $1.69.
CNC is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at West Pharmaceutical Services (WST) as well.
West Pharmaceutical Services is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on August 4, 2022. WST's Most Accurate Estimate sits at $2.25 a share 36 days from its next earnings release.
The Zacks Consensus Estimate for West Pharmaceutical Services is $2.19, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 2.59%.
Because both stocks hold a positive Earnings ESP, CNC and WST 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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Centene Corporation (CNC) : Free Stock Analysis Report
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