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. Johnson & Johnson (JNJ) earns a Zacks Rank #3 29 days from its next quarterly earnings release on April 15, 2025, and its Most Accurate Estimate comes in at $2.61 a share.
JNJ has an Earnings ESP figure of 0.75%, which, as explained above, is calculated by taking the percentage difference between the $2.61 Most Accurate Estimate and the Zacks Consensus Estimate of $2.59.
JNJ is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is Catalyst Pharmaceutical (CPRX).
Catalyst Pharmaceutical is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 14, 2025. CPRX's Most Accurate Estimate sits at $0.55 a share 58 days from its next earnings release.
For Catalyst Pharmaceutical, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.53 is 2.83%.
JNJ and CPRX'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 >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Catalyst Pharmaceuticals, Inc. (CPRX) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.