Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
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. Travelers (TRV) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.63 a share, just 30 days from its upcoming earnings release on April 16, 2025.
Travelers' Earnings ESP sits at 20.38%, which, as explained above, is calculated by taking the percentage difference between the $0.63 Most Accurate Estimate and the Zacks Consensus Estimate of $0.53.
TRV is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Manulife Financial (MFC).
Manulife Financial is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 14, 2025. MFC's Most Accurate Estimate sits at $0.72 a share 58 days from its next earnings release.
The Zacks Consensus Estimate for Manulife Financial is $0.72, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.7%.
Because both stocks hold a positive Earnings ESP, TRV and MFC 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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The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
Manulife Financial Corp (MFC) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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