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.
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. Cheniere Energy (LNG) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $7.19 a share, just eight days from its upcoming earnings release on May 2, 2023.
Cheniere Energy's Earnings ESP sits at 34.93%, which, as explained above, is calculated by taking the percentage difference between the $7.19 Most Accurate Estimate and the Zacks Consensus Estimate of $5.33.
LNG is just one of a large group of Oils-Energy stocks with a positive ESP figure. Exxon Mobil (XOM) is another qualifying stock you may want to consider.
Exxon Mobil is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 28, 2023. XOM's Most Accurate Estimate sits at $2.67 a share four days from its next earnings release.
Exxon Mobil's Earnings ESP figure currently stands at 0.55% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.65.
LNG and XOM'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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