Why They Should Be on Your Radar

Why They Should Be on Your Radar

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.

2 Stocks to Add to Your Watchlist

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. Alphabet (GOOGL) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $1.87 a share four days away from its upcoming earnings release on July 23, 2024.

Alphabet’s Earnings ESP sits at 1.11%, which, as explained above, is calculated by taking the percentage difference between the $1.87 Most Accurate Estimate and the Zacks Consensus Estimate of $1.85.

GOOGL is just one of a large group of Computer and Technology stocks with a positive ESP figure. Axcelis Technologies (ACLS) is another qualifying stock you may want to consider.

Axcelis Technologies, which is readying to report earnings on July 31, 2024, sits at a Zacks Rank #1 (Strong Buy) right now. It’s Most Accurate Estimate is currently $1.39 a share, and ACLS is 12 days out from its next earnings report.

The Zacks Consensus Estimate for Axcelis Technologies is $1.35, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 2.97%.

Because both stocks hold a positive Earnings ESP, GOOGL and ACLS could potentially post earnings beats in their next reports.

Find Stocks to Buy or Sell Before They’re Reported

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

Alphabet Inc. (GOOGL) : Free Stock Analysis Report

Axcelis Technologies, Inc. (ACLS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

link