Want better returns? Don’t ignore these 2 earnings-beating financial stocks

Quarterly financial reports play a key role on Wall Street because they help investors see how a company is doing and what may happen in the near future. Of all the metrics and outcomes to consider, earnings are one of the most important.

The amount you earn is crucial in itself, but achieving your 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 hit could help the stock rise even higher.

2 stocks to add to your watchlist

The goal of the Zacks Earnings ESP is to find earnings surprises by focusing on the latest analyst revisions. The basic idea is that if an analyst re-evaluates his earnings estimate before an earnings release, it means he likely has new information that may be more accurate. The essence of the ESP model is to compare the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Estimate.

The last thing we’ll do today, now that we have an idea about ESP and how powerful a tool it can be, is to take a look at qualifying stocks. Wells Fargo (WFC) is currently sporting a Zacks Rank of #3 with the Most Accurate Estimate at $1.29 per share four days ahead of its upcoming earnings release on October 13, 2023.

WFC has an Earnings ESP of 3.83%, which, as explained above, is calculated by taking the percentage difference between the Most Accurate Estimate of $1.29 and the Zacks Consensus Estimate of $1.24.

WFC is one of the large databases of financial companies with positive ESPs. Another solid looking stock is Arch Capital Group (ACGL).

Arch Capital Group, which is poised to report earnings on October 30, 2023, is currently sporting a Zacks Rank of #3 (Hold). The most accurate estimate is currently $1.39 per share, and ACGL is 21 days away from its next earnings report.

The Zacks Consensus Estimate for Arch Capital Group is $1.29, and when you consider the percentage difference between that number and its most accurate estimate, you get an Earnings ESP of 7.61%.

Positive ESP numbers for WFC and ACGL tell us that both stocks have a good chance of beating analyst expectations in their next earnings report.

Find stocks you can buy or sell before they are reported

Use the Zacks Earnings ESP filter to view stocks most likely to experience positive or negative surprises to buy or sell before they are reported as seasonal earnings. Check here >>

Want the latest recommendations from Zacks Investment Research? Today you can download the top 7 stocks for the next 30 days. Click to get this free report

Wells Fargo & Company (WFC): Free Stock Analysis Report

Arch Capital Group Ltd. (ACGL): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research