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.
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. CyberArk (CYBR) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.72 a share, just 30 days from its upcoming earnings release on February 13, 2025.
By taking the percentage difference between the $0.72 Most Accurate Estimate and the $0.71 Zacks Consensus Estimate, CyberArk has an Earnings ESP of 0.6%.
CYBR is part of a big group of Computer and Technology stocks that boast a positive ESP, and investors may want to take a look at Adobe Systems (ADBE) as well.
Adobe Systems is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on March 13, 2025. ADBE's Most Accurate Estimate sits at $4.98 a share 58 days from its next earnings release.
Adobe Systems' Earnings ESP figure currently stands at 0.17% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $4.97.
Because both stocks hold a positive Earnings ESP, CYBR and ADBE 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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CyberArk Software Ltd. (CYBR) : Free Stock Analysis Report
Adobe Inc. (ADBE) : Free Stock Analysis Report
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