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.
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 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. Bunge (BG) earns a Zacks Rank #3 16 days from its next quarterly earnings release on May 3, 2023, and its Most Accurate Estimate comes in at $3.44 a share.
BG has an Earnings ESP figure of 0.73%, which, as explained above, is calculated by taking the percentage difference between the $3.44 Most Accurate Estimate and the Zacks Consensus Estimate of $3.41.
BG is just one of a large group of Basic Materials stocks with a positive ESP figure. Freeport-McMoRan (FCX) is another qualifying stock you may want to consider.
Freeport-McMoRan is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 21, 2023. FCX's Most Accurate Estimate sits at $0.47 a share four days from its next earnings release.
For Freeport-McMoRan, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.43 is 7.83%.
BG and FCX'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 >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report