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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.
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. Canadian Imperial Bank (CM) earns a Zacks Rank #3 17 days from its next quarterly earnings release on May 26, 2022, and its Most Accurate Estimate comes in at $2.93 a share.
Canadian Imperial Bank's Earnings ESP sits at 0.34%, which, as explained above, is calculated by taking the percentage difference between the $2.93 Most Accurate Estimate and the Zacks Consensus Estimate of $2.92.
CM is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is The Hartford (HIG).
Slated to report earnings on July 27, 2022, The Hartford holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.61 a share 79 days from its next quarterly update.
The Zacks Consensus Estimate for The Hartford is $1.60, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.58%.
Because both stocks hold a positive Earnings ESP, CM and HIG 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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Canadian Imperial Bank of Commerce (CM) : Free Stock Analysis Report
The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
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