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.

2 Stocks to Add to Your Watchlist

The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information. 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.

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. Darden Restaurants (DRI) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $2.67 a share, just 27 days from its upcoming earnings release on March 21, 2024.

DRI has an Earnings ESP figure of 1.11%, which, as explained above, is calculated by taking the percentage difference between the $2.67 Most Accurate Estimate and the Zacks Consensus Estimate of $2.64.

DRI is part of a big group of Retail-Wholesale stocks that boast a positive ESP, and investors may want to take a look at Amazon (AMZN) as well.

Amazon, which is readying to report earnings on April 25, 2024, sits at a Zacks Rank #1 (Strong Buy) right now. It's Most Accurate Estimate is currently $0.82 a share, and AMZN is 62 days out from its next earnings report.

The Zacks Consensus Estimate for Amazon is $0.80, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 2.49%.

Because both stocks hold a positive Earnings ESP, DRI and AMZN 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 >>

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Darden Restaurants, Inc. (DRI) : Free Stock Analysis Report

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