This world-changing technology is projected to generate $100s of billions by 2025.

Zacks’ Top Picks to Cash in on Artificial Intelligence However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Synopsys doesn't appear a compelling earnings-beat candidate. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.Īn earnings beat or miss may not be the sole basis for a stock moving higher or lower. However, the model's predictive power is significant for positive ESP readings only.Ī positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. Our proprietary surprise prediction model - the Zacks Earnings ESP (Expected Surprise Prediction) - has this insight at its core. Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out.

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