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 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. HP (HPQ) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $1.07 a share, just five days from its upcoming earnings release on May 31, 2022.
HP’s Earnings ESP sits at 0.94%, which, as explained above, is calculated by taking the percentage difference between the $1.07 Most Accurate Estimate and the Zacks Consensus Estimate of $1.06.
HPQ is just one of a large group of Computer and Technology stocks with a positive ESP figure. SAP (SAP) is another qualifying stock you may want to consider.
SAP, which is readying to report earnings on July 20, 2022, sits at a Zacks Rank #2 (Buy) right now. It’s Most Accurate Estimate is currently $1.31 a share, and SAP is 55 days out from its next earnings report.
SAP’s Earnings ESP figure currently stands at 7.41% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.22.
HPQ and SAP’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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