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.
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. Steel Dynamics (STLD) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $4.93 a share, just 28 days from its upcoming earnings release on October 17, 2022.
Steel Dynamics' Earnings ESP sits at 1.44%, which, as explained above, is calculated by taking the percentage difference between the $4.93 Most Accurate Estimate and the Zacks Consensus Estimate of $4.86.
STLD is just one of a large group of Basic Materials stocks with a positive ESP figure. Agnico Eagle Mines (AEM) is another qualifying stock you may want to consider.
Agnico Eagle Mines, which is readying to report earnings on October 26, 2022, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.49 a share, and AEM is 37 days out from its next earnings report.
The Zacks Consensus Estimate for Agnico Eagle Mines is $0.43, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 13.08%.
STLD and AEM'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 >>
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
Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research