Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
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. BILL Holdings (BILL) earns a Zacks Rank #1 24 days from its next quarterly earnings release on February 13, 2025, and its Most Accurate Estimate comes in at $0.47 a share.
BILL has an Earnings ESP figure of 1.68%, which, as explained above, is calculated by taking the percentage difference between the $0.47 Most Accurate Estimate and the Zacks Consensus Estimate of $0.46.
BILL 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 Nutanix (NTNX) as well.
Slated to report earnings on February 26, 2025, Nutanix holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.47 a share 37 days from its next quarterly update.
The Zacks Consensus Estimate for Nutanix is $0.47, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.49%.
Because both stocks hold a positive Earnings ESP, BILL and NTNX 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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