Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
Now that we understand what the ESP is and how beneficial it can be, let’s dive into a stock that currently fits the bill. Textron (TXT) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $1.60 a share, just 30 days from its upcoming earnings release on January 24, 2024.
By taking the percentage difference between the $1.60 Most Accurate Estimate and the $1.53 Zacks Consensus Estimate, Textron has an Earnings ESP of 4.69%.
TXT is part of a big group of Aerospace stocks that boast a positive ESP, and investors may want to take a look at Virgin Galactic (SPCE) as well.
Virgin Galactic, which is readying to report earnings on February 27, 2024, sits at a Zacks Rank #2 (Buy) right now. It’s Most Accurate Estimate is currently -$0.26 a share, and SPCE is 64 days out from its next earnings report.
Virgin Galactic’s Earnings ESP figure currently stands at 14.05% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.30.
TXT and SPCE’s positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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
Textron Inc. (TXT) : Free Stock Analysis Report
Virgin Galactic Holdings, Inc. (SPCE) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Credit: Source link