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.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
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.
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. Goodyear (GT) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $0.63 a share four days away from its upcoming earnings release on October 31, 2022.
By taking the percentage difference between the $0.63 Most Accurate Estimate and the $0.61 Zacks Consensus Estimate, Goodyear has an Earnings ESP of 4.13%.
GT is one of just a large database of Auto-Tires-Trucks stocks with positive ESPs. Another solid-looking stock is Rivian Automotive (RIVN).
Rivian Automotive is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 9, 2022. RIVN’s Most Accurate Estimate sits at -$1.77 a share 13 days from its next earnings release.
Rivian Automotive’s Earnings ESP figure currently stands at 0.47% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$1.78.
GT and RIVN’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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The Goodyear Tire & Rubber Company (GT) : Free Stock Analysis Report
Rivian Automotive, Inc. (RIVN) : Free Stock Analysis Report
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