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.
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 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. Dycom Industries (DY) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.93 a share, just 22 days from its upcoming earnings release on February 26, 2025.
Dycom Industries' Earnings ESP sits at 3.91%, which, as explained above, is calculated by taking the percentage difference between the $0.93 Most Accurate Estimate and the Zacks Consensus Estimate of $0.90.
DY is just one of a large group of Construction stocks with a positive ESP figure. TopBuild (BLD) is another qualifying stock you may want to consider.
Slated to report earnings on February 25, 2025, TopBuild holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $5.15 a share 21 days from its next quarterly update.
For TopBuild, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $5.08 is 1.28%.
DY and BLD's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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