Earnings are arguably the most important single number on a company’s quarterly financial report. Wall Street clearly dives into all of the other metrics and management’s input, but the EPS figure helps cut through all the noise.
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 last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. Brookfield Renewable Energy Partners (BEP) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at -$0.22 a share 29 days away from its upcoming earnings release on May 2, 2025.
BEP has an Earnings ESP figure of 11.11%, which, as explained above, is calculated by taking the percentage difference between the -$0.22 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.25.
BEP is just one of a large group of Utilities stocks with a positive ESP figure. Atmos Energy (ATO) is another qualifying stock you may want to consider.
Slated to report earnings on May 14, 2025, Atmos Energy holds a #2 (Buy) ranking on the Zacks Rank, and it’s Most Accurate Estimate is $3.03 a share 41 days from its next quarterly update.
The Zacks Consensus Estimate for Atmos Energy is $2.92, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 3.77%.
Because both stocks hold a positive Earnings ESP, BEP and ATO could potentially post earnings beats in their next reports.
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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