These 2 Finance Stocks Could Beat Earnings: Why They Should Be on Your Radar

Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

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.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

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.

Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.

Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 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 American Express?

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. American Express (AXP) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $3.87 a share, just eight days from its upcoming earnings release on July 18, 2025.

AXP has an Earnings ESP figure of +0.48%, which, as explained above, is calculated by taking the percentage difference between the $3.87 Most Accurate Estimate and the Zacks Consensus Estimate of $3.85. American Express is one of a large database 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.

AXP is part of a big group of Finance stocks that boast a positive ESP, and investors may want to take a look at Bank of Nova Scotia (BNS) as well.

Bank of Nova Scotia is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on August 26, 2025. BNS' Most Accurate Estimate sits at $1.30 a share 47 days from its next earnings release.

Bank of Nova Scotia's Earnings ESP figure currently stands at +1.56% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.28.

Because both stocks hold a positive Earnings ESP, AXP and BNS 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 >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research