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.
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.
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.
The final step today is to look at a stock that meets our ESP qualifications. Leidos (LDOS) earns a Zacks Rank #2 29 days from its next quarterly earnings release on February 11, 2025, and its Most Accurate Estimate comes in at $2.30 a share.
LDOS has an Earnings ESP figure of 5.42%, which, as explained above, is calculated by taking the percentage difference between the $2.30 Most Accurate Estimate and the Zacks Consensus Estimate of $2.18.
LDOS is one of just a large database of Aerospace stocks with positive ESPs. Another solid-looking stock is Woodward (WWD).
Woodward is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on February 3, 2025. WWD's Most Accurate Estimate sits at $1.14 a share 21 days from its next earnings release.
The Zacks Consensus Estimate for Woodward is $1.13, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 1.28%.
LDOS and WWD's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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