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.
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, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.
The final step today is to look at a stock that meets our ESP qualifications. Williams Companies, Inc. (The) (WMB) earns a Zacks Rank #2 12 days from its next quarterly earnings release on May 5, 2025, and its Most Accurate Estimate comes in at $0.59 a share.
Williams Companies, Inc. (The)'s Earnings ESP sits at 2.79%, which, as explained above, is calculated by taking the percentage difference between the $0.59 Most Accurate Estimate and the Zacks Consensus Estimate of $0.57.
WMB is part of a big group of Oils-Energy stocks that boast a positive ESP, and investors may want to take a look at Shoals Technologies Group (SHLS) as well.
Slated to report earnings on May 6, 2025, Shoals Technologies Group holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.04 a share 13 days from its next quarterly update.
Shoals Technologies Group's Earnings ESP figure currently stands at 3.23% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.04.
Because both stocks hold a positive Earnings ESP, WMB and SHLS 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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Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
Shoals Technologies Group, Inc. (SHLS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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