Two factors often determine stock prices in the long run: earnings and interest rates. Investors can’t control the latter, but they can focus on a company’s earnings results every quarter.
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 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.
Now that we understand what the ESP is and how beneficial it can be, let’s dive into a stock that currently fits the bill. Keysight (KEYS) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $1.68 a share, just six days from its upcoming earnings release on May 17, 2022.
Keysight’s Earnings ESP sits at 0.48%, which, as explained above, is calculated by taking the percentage difference between the $1.68 Most Accurate Estimate and the Zacks Consensus Estimate of $1.67.
KEYS is just one of a large group of Computer and Technology stocks with a positive ESP figure. Twitter (TWTR) is another qualifying stock you may want to consider.
Twitter is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on July 28, 2022. TWTR’s Most Accurate Estimate sits at $0.37 a share 78 days from its next earnings release.
For Twitter, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.29 is 29.26%.
Because both stocks hold a positive Earnings ESP, KEYS and TWTR 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 >>
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Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report
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