Yahoo Finance How to Find Strong Business Services Stocks Slated for Positive Earnings Surprises
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.
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. Block (SQ) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.62 a share, just 24 days from its upcoming earnings release on February 22, 2024.
By taking the percentage difference between the $0.62 Most Accurate Estimate and the $0.55 Zacks Consensus Estimate, Block has an Earnings ESP of 10.89%.
SQ is part of a big group of Business Services stocks that boast a positive ESP, and investors may want to take a look at Paychex (PAYX) as well.
Slated to report earnings on April 3, 2024, Paychex holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.37 a share 65 days from its next quarterly update.
The Zacks Consensus Estimate for Paychex is $1.37, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.26%.
SQ and PAYX'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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Block, Inc. (SQ) : Free Stock Analysis Report
Paychex, Inc. (PAYX) : Free Stock Analysis Report
