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.
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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. Neogen (NEOG) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.05 a share, just seven days from its upcoming earnings release on March 30, 2023.
NEOG has an Earnings ESP figure of 22.73%, which, as explained above, is calculated by taking the percentage difference between the $0.05 Most Accurate Estimate and the Zacks Consensus Estimate of $0.04.
NEOG is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Astrazeneca (AZN) as well.
Astrazeneca is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 5, 2023. AZN's Most Accurate Estimate sits at $0.85 a share 43 days from its next earnings release.
Astrazeneca's Earnings ESP figure currently stands at 1.19% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.84.
NEOG and AZN'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 >>
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