Earnings are arguably the most important single number on a company’s quarterly financial report. Wall Street clearly dives into all of the other metrics and management’s input, but the EPS figure helps cut through all the noise.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information. With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure.
The final step today is to look at a stock that meets our ESP qualifications. Cisco Systems (CSCO) earns a Zacks Rank #2 two days from its next quarterly earnings release on May 18, 2022, and its Most Accurate Estimate comes in at $0.87 a share.
Cisco Systems’ Earnings ESP sits at 0.84%, which, as explained above, is calculated by taking the percentage difference between the $0.87 Most Accurate Estimate and the Zacks Consensus Estimate of $0.86.
CSCO is just one of a large group of Computer and Technology stocks with a positive ESP figure. Zillow Group (ZG) is another qualifying stock you may want to consider.
Zillow Group is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on August 4, 2022. ZG’s Most Accurate Estimate sits at $0.39 a share 80 days from its next earnings release.
Zillow Group’s Earnings ESP figure currently stands at 3.8% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.37.
CSCO and ZG’s positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report
Zillow Group, Inc. (ZG) : Free Stock Analysis Report
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