Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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 final step today is to look at a stock that meets our ESP qualifications. Star Bulk Carriers (SBLK) earns a Zacks Rank #3 four days from its next quarterly earnings release on May 16, 2023, and its Most Accurate Estimate comes in at $0.29 a share.
Star Bulk Carriers' Earnings ESP sits at 20.83%, which, as explained above, is calculated by taking the percentage difference between the $0.29 Most Accurate Estimate and the Zacks Consensus Estimate of $0.24.
SBLK is one of just a large database of Transportation stocks with positive ESPs. Another solid-looking stock is United Parcel Service (UPS).
United Parcel Service is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on July 25, 2023. UPS' Most Accurate Estimate sits at $2.53 a share 74 days from its next earnings release.
United Parcel Service's Earnings ESP figure currently stands at 1.65% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.49.
Because both stocks hold a positive Earnings ESP, SBLK and UPS 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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