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.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.

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.

The final step today is to look at a stock that meets our ESP qualifications. Nucor (NUE) earns a Zacks Rank #3 six days from its next quarterly earnings release on April 22, 2024, and its Most Accurate Estimate comes in at $3.64 a share.

NUE has an Earnings ESP figure of 0.64%, which, as explained above, is calculated by taking the percentage difference between the $3.64 Most Accurate Estimate and the Zacks Consensus Estimate of $3.62.

NUE is just one of a large group of Basic Materials stocks with a positive ESP figure. Dow Inc. (DOW) is another qualifying stock you may want to consider.

Dow Inc. is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 25, 2024. DOW's Most Accurate Estimate sits at $0.48 a share nine days from its next earnings release.

Dow Inc.'s Earnings ESP figure currently stands at 2.28% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.47.

Because both stocks hold a positive Earnings ESP, NUE and DOW 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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