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.
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. BJ's Wholesale Club (BJ) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.92 a share, just two days from its upcoming earnings release on November 21, 2024.
By taking the percentage difference between the $0.92 Most Accurate Estimate and the $0.91 Zacks Consensus Estimate, BJ's Wholesale Club has an Earnings ESP of 0.15%.
BJ is one of just a large database of Consumer Discretionary stocks with positive ESPs. Another solid-looking stock is Under Armour (UAA).
Slated to report earnings on February 13, 2025, Under Armour holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.04 a share 86 days from its next quarterly update.
The Zacks Consensus Estimate for Under Armour is $0.04, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 4.76%.
BJ and UAA's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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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BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
Under Armour, Inc. (UAA) : Free Stock Analysis Report
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