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.
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.
The final step today is to look at a stock that meets our ESP qualifications. Onto Innovation (ONTO) earns a Zacks Rank #2 14 days from its next quarterly earnings release on October 31, 2024, and its Most Accurate Estimate comes in at $1.35 a share.
ONTO has an Earnings ESP figure of 2.74%, which, as explained above, is calculated by taking the percentage difference between the $1.35 Most Accurate Estimate and the Zacks Consensus Estimate of $1.31.
ONTO is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Commvault Systems (CVLT).
Slated to report earnings on October 29, 2024, Commvault Systems holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.78 a share 12 days from its next quarterly update.
For Commvault Systems, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.75 is 4.46%.
ONTO and CVLT's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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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Onto Innovation Inc. (ONTO) : Free Stock Analysis Report
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