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, 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 last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. Fidelity National Information Services (FIS) holds a Zacks Rank #2 at the moment and its Most Accurate Estimate comes in at $1.21 a share seven days away from its upcoming earnings release on May 6, 2025.
By taking the percentage difference between the $1.21 Most Accurate Estimate and the $1.20 Zacks Consensus Estimate, Fidelity National Information Services has an Earnings ESP of 0.88%.
FIS is just one of a large group of Business Services stocks with a positive ESP figure. DLocal (DLO) is another qualifying stock you may want to consider.
DLocal is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 14, 2025. DLO's Most Accurate Estimate sits at $0.13 a share 15 days from its next earnings release.
The Zacks Consensus Estimate for DLocal is $0.12, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 5.41%.
Because both stocks hold a positive Earnings ESP, FIS and DLO 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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Fidelity National Information Services, Inc. (FIS) : Free Stock Analysis Report
DLocal Limited (DLO) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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