Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
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. Boyd Gaming (BYD) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $1.41 a share four days away from its upcoming earnings release on July 26, 2022.
Boyd Gaming's Earnings ESP sits at 1.62%, which, as explained above, is calculated by taking the percentage difference between the $1.41 Most Accurate Estimate and the Zacks Consensus Estimate of $1.39.
BYD is one of just a large database of Consumer Discretionary stocks with positive ESPs. Another solid-looking stock is OneWater Marine (ONEW).
OneWater Marine, which is readying to report earnings on August 4, 2022, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $3.69 a share, and ONEW is 13 days out from its next earnings report.
OneWater Marine's Earnings ESP figure currently stands at 5.88% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.49.
BYD and ONEW's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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
Boyd Gaming Corporation (BYD) : Free Stock Analysis Report
OneWater Marine Inc. (ONEW) : Free Stock Analysis Report
To read this article on Zacks.com click here.