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.
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.
The final step today is to look at a stock that meets our ESP qualifications. Clearway Energy (CWEN) earns a Zacks Rank #1 21 days from its next quarterly earnings release on February 23, 2023, and its Most Accurate Estimate comes in at -$0.20 a share.
Clearway Energy’s Earnings ESP sits at 77.19%, which, as explained above, is calculated by taking the percentage difference between the -$0.20 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.88.
CWEN is part of a big group of Oils-Energy stocks that boast a positive ESP, and investors may want to take a look at Hess (HES) as well.
Hess, which is readying to report earnings on April 26, 2023, sits at a Zacks Rank #3 (Hold) right now. It’s Most Accurate Estimate is currently $1.85 a share, and HES is 83 days out from its next earnings report.
Hess’ Earnings ESP figure currently stands at 3.82% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.78.
CWEN and HES’ 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 >>
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
Clearway Energy, Inc. (CWEN) : Free Stock Analysis Report
Hess Corporation (HES) : Free Stock Analysis Report
To read this article on Zacks.com click here.