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.
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.
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. Victory Capital Holdings (VCTR) earns a Zacks Rank #3 30 days from its next quarterly earnings release on November 7, 2024, and its Most Accurate Estimate comes in at $1.36 a share.
By taking the percentage difference between the $1.36 Most Accurate Estimate and the $1.34 Zacks Consensus Estimate, Victory Capital Holdings has an Earnings ESP of 1.64%.
VCTR is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Rithm (RITM).
Rithm, which is readying to report earnings on October 24, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.44 a share, and RITM is 16 days out from its next earnings report.
The Zacks Consensus Estimate for Rithm is $0.43, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 2.33%.
VCTR and RITM's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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Victory Capital Holdings, Inc. (VCTR) : Free Stock Analysis Report
Rithm Capital Corp. (RITM) : Free Stock Analysis Report
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