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 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 last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. Strategic Education (STRA) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $1.02 a share 22 days away from its upcoming earnings release on April 24, 2025.
STRA has an Earnings ESP figure of 0.66%, which, as explained above, is calculated by taking the percentage difference between the $1.02 Most Accurate Estimate and the Zacks Consensus Estimate of $1.01.
STRA is one of just a large database of Consumer Discretionary stocks with positive ESPs. Another solid-looking stock is Hasbro (HAS).
Hasbro, which is readying to report earnings on April 23, 2025, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.71 a share, and HAS is 21 days out from its next earnings report.
Hasbro's Earnings ESP figure currently stands at 2.11% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.70.
Because both stocks hold a positive Earnings ESP, STRA and HAS 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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Strategic Education Inc. (STRA) : Free Stock Analysis Report
Hasbro, Inc. (HAS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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