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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
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. Deere (DE) earns a Zacks Rank #3 three days from its next quarterly earnings release on August 19, 2022, and its Most Accurate Estimate comes in at $6.74 a share.
DE has an Earnings ESP figure of 1.83%, which, as explained above, is calculated by taking the percentage difference between the $6.74 Most Accurate Estimate and the Zacks Consensus Estimate of $6.62.
DE is just one of a large group of Industrial Products stocks with a positive ESP figure. Eaton (ETN) is another qualifying stock you may want to consider.
Eaton, which is readying to report earnings on November 1, 2022, sits at a Zacks Rank #3 (Hold) right now. It’s Most Accurate Estimate is currently $2.02 a share, and ETN is 77 days out from its next earnings report.
The Zacks Consensus Estimate for Eaton is $2.01, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.1%.
Because both stocks hold a positive Earnings ESP, DE and ETN 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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Deere & Company (DE) : Free Stock Analysis Report
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
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