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.

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 last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. Astrazeneca (AZN) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $1.02 a share seven days away from its upcoming earnings release on November 12, 2024.

By taking the percentage difference between the $1.02 Most Accurate Estimate and the $1.01 Zacks Consensus Estimate, Astrazeneca has an Earnings ESP of 0.66%.

AZN is just one of a large group of Medical stocks with a positive ESP figure. Editas Medicine (EDIT) is another qualifying stock you may want to consider.

Editas Medicine, which is readying to report earnings on February 26, 2025, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently -$0.11 a share, and EDIT is 113 days out from its next earnings report.

The Zacks Consensus Estimate for Editas Medicine is -$0.67, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 83.52%.

Because both stocks hold a positive Earnings ESP, AZN and EDIT 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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AstraZeneca PLC (AZN) : Free Stock Analysis Report

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