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.
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. Louisiana-Pacific (LPX) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.83 a share, just 30 days from its upcoming earnings release on February 12, 2025.
By taking the percentage difference between the $0.83 Most Accurate Estimate and the $0.74 Zacks Consensus Estimate, Louisiana-Pacific has an Earnings ESP of 11.79%.
LPX is one of just a large database of Construction stocks with positive ESPs. Another solid-looking stock is Aspen Aerogels (ASPN).
Slated to report earnings on February 10, 2025, Aspen Aerogels holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.14 a share 28 days from its next quarterly update.
The Zacks Consensus Estimate for Aspen Aerogels is $0.09, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 53.12%.
Because both stocks hold a positive Earnings ESP, LPX and ASPN 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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Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report
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