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.
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 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.
The final step today is to look at a stock that meets our ESP qualifications. TopBuild (BLD) earns a Zacks Rank #3 eight days from its next quarterly earnings release on February 25, 2025, and its Most Accurate Estimate comes in at $5.15 a share.
BLD has an Earnings ESP figure of 1.28%, which, as explained above, is calculated by taking the percentage difference between the $5.15 Most Accurate Estimate and the Zacks Consensus Estimate of $5.08.
BLD is one of just a large database of Construction stocks with positive ESPs. Another solid-looking stock is Sterling Infrastructure (STRL).
Slated to report earnings on February 25, 2025, Sterling Infrastructure holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.38 a share eight days from its next quarterly update.
Sterling Infrastructure's Earnings ESP figure currently stands at 2.99% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.34.
BLD and STRL'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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TopBuild Corp. (BLD) : Free Stock Analysis Report
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