Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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. Williams-Sonoma (WSM) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $2.90 a share, just 14 days from its upcoming earnings release on March 12, 2025.
By taking the percentage difference between the $2.90 Most Accurate Estimate and the $2.88 Zacks Consensus Estimate, Williams-Sonoma has an Earnings ESP of 0.47%.
WSM is part of a big group of Retail-Wholesale stocks that boast a positive ESP, and investors may want to take a look at Dick's Sporting Goods (DKS) as well.
Slated to report earnings on March 11, 2025, Dick's Sporting Goods holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $3.50 a share 13 days from its next quarterly update.
The Zacks Consensus Estimate for Dick's Sporting Goods is $3.47, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.98%.
WSM and DKS' positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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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Williams-Sonoma, Inc. (WSM) : Free Stock Analysis Report
DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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