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.
The final step today is to look at a stock that meets our ESP qualifications. Wix.com (WIX) earns a Zacks Rank #2 17 days from its next quarterly earnings release on May 16, 2022, and its Most Accurate Estimate comes in at -$0.54 a share.
WIX has an Earnings ESP figure of 15.09%, which, as explained above, is calculated by taking the percentage difference between the -$0.54 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.64.
WIX is part of a big group of Computer and Technology stocks that boast a positive ESP, and investors may want to take a look at HubSpot (HUBS) as well.
HubSpot, which is readying to report earnings on May 5, 2022, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.47 a share, and HUBS is six days out from its next earnings report.
The Zacks Consensus Estimate for HubSpot is $0.47, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.21%.
WIX and HUBS' 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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Wix.com Ltd. (WIX) : Free Stock Analysis Report
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