Yahoo Finance How to Find Strong Business Services Stocks Slated for Positive Earnings Surprises
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.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive 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.
The final step today is to look at a stock that meets our ESP qualifications. Automatic Data Processing (ADP) earns a Zacks Rank #3 two days from its next quarterly earnings release on May 1, 2024, and its Most Accurate Estimate comes in at $2.81 a share.
ADP has an Earnings ESP figure of 1.72%, which, as explained above, is calculated by taking the percentage difference between the $2.81 Most Accurate Estimate and the Zacks Consensus Estimate of $2.76.
ADP is one of just a large database of Business Services stocks with positive ESPs. Another solid-looking stock is Omnicom (OMC).
Omnicom is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on July 16, 2024. OMC's Most Accurate Estimate sits at $1.89 a share 78 days from its next earnings release.
For Omnicom, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.88 is 0.71%.
ADP and OMC'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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Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
Omnicom Group Inc. (OMC) : Free Stock Analysis Report
