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.
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.
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. Braskem (BAK) earns a Zacks Rank #2 right now and its Most Accurate Estimate sits at $1.22 a share, just 16 days from its upcoming earnings release on August 3, 2022.
Braskem's Earnings ESP sits at 21.5%, which, as explained above, is calculated by taking the percentage difference between the $1.22 Most Accurate Estimate and the Zacks Consensus Estimate of $1.
BAK is part of a big group of Oils-Energy stocks that boast a positive ESP, and investors may want to take a look at Chesapeake Energy (CHK) as well.
Chesapeake Energy, which is readying to report earnings on August 9, 2022, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $3.67 a share, and CHK is 22 days out from its next earnings report.
Chesapeake Energy's Earnings ESP figure currently stands at 12.15% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.27.
Because both stocks hold a positive Earnings ESP, BAK and CHK 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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