Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.

The earnings figure itself is key, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb even higher.

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.

The final step today is to look at a stock that meets our ESP qualifications. PacWest Bancorp (PACW) earns a Zacks Rank #3 19 days from its next quarterly earnings release on October 18, 2023, and its Most Accurate Estimate comes in at $0.08 a share.

By taking the percentage difference between the $0.08 Most Accurate Estimate and the $0.05 Zacks Consensus Estimate, PacWest Bancorp has an Earnings ESP of 66.67%.

PACW is part of a big group of Finance stocks that boast a positive ESP, and investors may want to take a look at Wells Fargo (WFC) as well.

Slated to report earnings on October 13, 2023, Wells Fargo holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.27 a share 14 days from its next quarterly update.

The Zacks Consensus Estimate for Wells Fargo is $1.23, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 2.97%.

Because both stocks hold a positive Earnings ESP, PACW and WFC could potentially post earnings beats in their next reports.

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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PacWest Bancorp (PACW) : Free Stock Analysis Report

Wells Fargo & Company (WFC) : Free Stock Analysis Report

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