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 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.
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. PDC Energy (PDCE) earns a Zacks Rank #2 right now and its Most Accurate Estimate sits at $4.40 a share, just 29 days from its upcoming earnings release on November 2, 2022.
PDCE has an Earnings ESP figure of 5.65%, which, as explained above, is calculated by taking the percentage difference between the $4.40 Most Accurate Estimate and the Zacks Consensus Estimate of $4.17.
PDCE is part of a big group of Oils-Energy stocks that boast a positive ESP, and investors may want to take a look at Chesapeake Energy (CHK) as well.
Chesapeake Energy, which is readying to report earnings on November 1, 2022, sits at a Zacks Rank #1 (Strong Buy) right now. It's Most Accurate Estimate is currently $4.79 a share, and CHK is 28 days out from its next earnings report.
The Zacks Consensus Estimate for Chesapeake Energy is $4.67, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 2.57%.
PDCE and CHK's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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PDC Energy, Inc. (PDCE) : Free Stock Analysis Report
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