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These 2 Finance Stocks Could Beat Earnings: Why They Should Be on Your Radar

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Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

The earnings figure itself is key, of course, 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 and vice versa.

The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.

The Zacks Earnings ESP, Explained

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.

With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.

Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.

Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.

Should You Consider BlackRock?

The final step today is to look at a stock that meets our ESP qualifications. BlackRock (BLK - Free Report) earns a #3 (Hold) eight days from its next quarterly earnings release on January 13, 2023, and its Most Accurate Estimate comes in at $8.08 a share.

BLK has an Earnings ESP figure of +3.06%, which, as explained above, is calculated by taking the percentage difference between the $8.08 Most Accurate Estimate and the Zacks Consensus Estimate of $7.84. BlackRock is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

BLK is just one of a large group of Finance stocks with a positive ESP figure. American Express (AXP - Free Report) is another qualifying stock you may want to consider.

Slated to report earnings on January 27, 2023, American Express holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $2.48 a share 22 days from its next quarterly update.

The Zacks Consensus Estimate for American Express is $2.19, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +13.38%.

Because both stocks hold a positive Earnings ESP, BLK and AXP could potentially post earnings beats in their next reports.

Find Stocks to Buy or Sell Before They're Reported

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 >>


See More Zacks Research for These Tickers


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BlackRock, Inc. (BLK) - free report >>

American Express Company (AXP) - free report >>

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