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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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 final step today is to look at a stock that meets our ESP qualifications. Splunk (SPLK) earns a Zacks Rank #3 nine days from its next quarterly earnings release on November 30, 2022, and its Most Accurate Estimate comes in at $0.25 a share.
Splunk's Earnings ESP sits at 9.43%, which, as explained above, is calculated by taking the percentage difference between the $0.25 Most Accurate Estimate and the Zacks Consensus Estimate of $0.23.
SPLK is just one of a large group of Computer and Technology stocks with a positive ESP figure. Arista Networks (ANET) is another qualifying stock you may want to consider.
Slated to report earnings on February 13, 2023, Arista Networks holds a #1 (Strong Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.21 a share 84 days from its next quarterly update.
Arista Networks' Earnings ESP figure currently stands at 1.07% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.20.
SPLK and ANET's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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Splunk Inc. (SPLK) : Free Stock Analysis Report
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