Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
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. Estee Lauder (EL) earns a Zacks Rank #3 13 days from its next quarterly earnings release on May 1, 2025, and its Most Accurate Estimate comes in at $0.34 a share.
Estee Lauder's Earnings ESP sits at 14.31%, which, as explained above, is calculated by taking the percentage difference between the $0.34 Most Accurate Estimate and the Zacks Consensus Estimate of $0.30.
EL is part of a big group of Consumer Staples stocks that boast a positive ESP, and investors may want to take a look at Tyson Foods (TSN) as well.
Tyson Foods is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 5, 2025. TSN's Most Accurate Estimate sits at $0.87 a share 17 days from its next earnings release.
The Zacks Consensus Estimate for Tyson Foods is $0.85, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 2.35%.
EL and TSN'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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The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
Tyson Foods, Inc. (TSN) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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