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Want Better Returns? Don?t Ignore These 2 Business Services Stocks Set to Beat Earnings

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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, 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.

Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.

The Zacks Earnings ESP, Explained

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. 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.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.

Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), or the top 15% and top 5% of stocks, respectively, should outperform the market; Strong Buy stocks should outperform more than any other rank.

Should You Consider Global Payments?

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. Global Payments (GPN - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.61 a share, just six days from its upcoming earnings release on May 1, 2024.

By taking the percentage difference between the $2.61 Most Accurate Estimate and the $2.57 Zacks Consensus Estimate, Global Payments has an Earnings ESP of +1.74%. Investors should also know that GPN is one of a large group 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.

GPN is one of just a large database of Business Services stocks with positive ESPs. Another solid-looking stock is Confluent (CFLT - Free Report) .

Confluent is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 7, 2024. CFLT's Most Accurate Estimate sits at $0.04 a share 12 days from its next earnings release.

The Zacks Consensus Estimate for Confluent is $0.02, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +150%.

GPN and CFLT's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

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


Normally $25 each - click below to receive one report FREE:


Global Payments Inc. (GPN) - free report >>

Confluent, Inc. (CFLT) - free report >>

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