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.

2 Stocks to Add to Your Watchlist

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.

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. Fabrinet (FN) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $2.27 a share, just five days from its upcoming earnings release on August 19, 2024.

FN has an Earnings ESP figure of 0.89%, which, as explained above, is calculated by taking the percentage difference between the $2.27 Most Accurate Estimate and the Zacks Consensus Estimate of $2.25.

FN is just one of a large group of Computer and Technology stocks with a positive ESP figure. DoubleVerify Holdings (DV) is another qualifying stock you may want to consider.

DoubleVerify Holdings is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 14, 2024. DV's Most Accurate Estimate sits at $0.11 a share 92 days from its next earnings release.

DoubleVerify Holdings' Earnings ESP figure currently stands at 15.18% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.09.

FN and DV'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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