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.
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. Marriott International (MAR) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $2.36 a share, just 21 days from its upcoming earnings release on May 7, 2025.
MAR has an Earnings ESP figure of 3.79%, which, as explained above, is calculated by taking the percentage difference between the $2.36 Most Accurate Estimate and the Zacks Consensus Estimate of $2.27.
MAR is just one of a large group of Consumer Discretionary stocks with a positive ESP figure. Under Armour (UAA) is another qualifying stock you may want to consider.
Under Armour is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on May 15, 2025. UAA's Most Accurate Estimate sits at -$0.07 a share 29 days from its next earnings release.
The Zacks Consensus Estimate for Under Armour is -$0.09, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 20.75%.
MAR and UAA'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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Marriott International, Inc. (MAR) : Free Stock Analysis Report
Under Armour, Inc. (UAA) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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