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.
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 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. Nextracker (NXT) earns a Zacks Rank #3 21 days from its next quarterly earnings release on May 13, 2025, and its Most Accurate Estimate comes in at $1.01 a share.
By taking the percentage difference between the $1.01 Most Accurate Estimate and the $0.98 Zacks Consensus Estimate, Nextracker has an Earnings ESP of 2.76%.
NXT is just one of a large group of Oils-Energy stocks with a positive ESP figure. Diamondback Energy (FANG) is another qualifying stock you may want to consider.
Slated to report earnings on May 5, 2025, Diamondback Energy holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $3.94 a share 13 days from its next quarterly update.
Diamondback Energy's Earnings ESP figure currently stands at 3.06% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.82.
Because both stocks hold a positive Earnings ESP, NXT and FANG 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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Nextracker Inc. (NXT) : Free Stock Analysis Report
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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