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.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
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. Fidelity National Information Services (FIS) earns a Zacks Rank #3 18 days from its next quarterly earnings release on February 11, 2025, and its Most Accurate Estimate comes in at $1.36 a share.
By taking the percentage difference between the $1.36 Most Accurate Estimate and the $1.35 Zacks Consensus Estimate, Fidelity National Information Services has an Earnings ESP of 0.41%.
FIS is one of just a large database of Business Services stocks with positive ESPs. Another solid-looking stock is Coherent (COHR).
Coherent, which is readying to report earnings on February 5, 2025, sits at a Zacks Rank #1 (Strong Buy) right now. It’s Most Accurate Estimate is currently $0.75 a share, and COHR is 12 days out from its next earnings report.
The Zacks Consensus Estimate for Coherent is $0.70, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 7.48%.
FIS and COHR’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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Fidelity National Information Services, Inc. (FIS) : Free Stock Analysis Report
