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.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information. With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure.
The final step today is to look at a stock that meets our ESP qualifications. Sunrun (RUN) earns a Zacks Rank #3 23 days from its next quarterly earnings release on February 16, 2023, and its Most Accurate Estimate comes in at $0.17 a share.
RUN has an Earnings ESP figure of 711.11%, which, as explained above, is calculated by taking the percentage difference between the $0.17 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.03.
RUN is part of a big group of Oils-Energy stocks that boast a positive ESP, and investors may want to take a look at Oceaneering International (OII) as well.
Slated to report earnings on February 23, 2023, Oceaneering International holds a #2 (Buy) ranking on the Zacks Rank, and it’s Most Accurate Estimate is $0.18 a share 30 days from its next quarterly update.
The Zacks Consensus Estimate for Oceaneering International is $0.17, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 9.09%.
Because both stocks hold a positive Earnings ESP, RUN and OII 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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Sunrun Inc. (RUN) : Free Stock Analysis Report
Oceaneering International, Inc. (OII) : Free Stock Analysis Report