In the end, earnings and interest rates are the two main variables that dictate stock values. Though they have no say over the latter, investors can keep an eye on quarterly earnings reports.
While the earnings figure is critical, the bottom line beat or miss can be equally, if not more, crucial at times. Investors would be wise to keep a careful eye on these earnings surprises, as a strong performance might propel a company to even greater heights.
The Expected Surprise Prediction (ESP) of Zacks Earnings is designed to identify earnings surprises by analyzing the most current analyst revisions. The underlying idea is that analysts usually have new knowledge that might make their earnings estimate more accurate
so if they revise it before the earnings announcement, it bodes well. The Expected Surprise Prediction is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate, which is the central component of the ESP model.
Now that we know what an ESP is and how useful it can be, we can delve into a stock that meets the criteria right now. Presently, Allstate (ALL) is ranked #3 by Zacks, with a Most Accurate Estimate of $4.26 per share, barely thirty days before its earnings release on May 1, 2024.
As mentioned earlier, Allstate's Earnings ESP is 12.87%, which is determined by subtracting the Zacks Consensus Estimate of $3.78 from the $4.26 Most Accurate Estimate.
Investors may wish to consider Agree Realty (ADC) in addition to ALL, since both companies are part of a large group of Finance stocks that have a positive ESP.
Agree Realty is expected to release its earnings on May 2, 2024, and it is now ranked #3 (Hold) on the Zacks Rank. The Most Accurate Estimate for the company is $1.02 per share, which will be updated 31 days before the next quarterly report.
After subtracting $1.01 from the Zacks Consensus Estimate, Agree Realty's Most Accurate Estimate yields an earnings surprise percentage of 1.13%. A good earnings surprise for ALL and ADC might be on the way, according to their favorable ESP measures.
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