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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
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. Virgin Galactic (SPCE) earns a Zacks Rank #2 right now and its Most Accurate Estimate sits at -$3.58 a share, just 29 days from its upcoming earnings release on November 13, 2024.
Virgin Galactic's Earnings ESP sits at 12.58%, which, as explained above, is calculated by taking the percentage difference between the -$3.58 Most Accurate Estimate and the Zacks Consensus Estimate of -$4.10.
SPCE is part of a big group of Aerospace stocks that boast a positive ESP, and investors may want to take a look at Lockheed Martin (LMT) as well.
Lockheed Martin is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on October 22, 2024. LMT's Most Accurate Estimate sits at $6.59 a share seven days from its next earnings release.
Lockheed Martin's Earnings ESP figure currently stands at 2.46% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $6.43.
Because both stocks hold a positive Earnings ESP, SPCE and LMT could potentially post earnings beats in their next reports.
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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Virgin Galactic Holdings, Inc. (SPCE) : Free Stock Analysis Report
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