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.
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. Magellan Midstream Partners (MMP) earns a Zacks Rank #2 right now and its Most Accurate Estimate sits at $1.33 a share, just 14 days from its upcoming earnings release on February 2, 2023.
Magellan Midstream Partners’ Earnings ESP sits at 1.62%, which, as explained above, is calculated by taking the percentage difference between the $1.33 Most Accurate Estimate and the Zacks Consensus Estimate of $1.31.
MMP is part of a big group of Oils-Energy stocks that boast a positive ESP, and investors may want to take a look at Energy Transfer LP (ET) as well.
Energy Transfer LP, which is readying to report earnings on February 15, 2023, sits at a Zacks Rank #1 (Strong Buy) right now. It’s Most Accurate Estimate is currently $0.40 a share, and ET is 27 days out from its next earnings report.
For Energy Transfer LP, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.34 is 18.52%.
Because both stocks hold a positive Earnings ESP, MMP and ET 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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